On the Road

Foreign Currencies. the Falling Dollar and Travel – the Rate of Exchange

Will the dollar recover? Will the USA become the backpacker’s destination of choice? Only Road Junky knows that it doesn’t know.

Picture it now, armies of faithful jihadis glued to Al-Jazeera, praying fervently for the dollar to drop another few cents against the foreign currencies of the world, bringing America one step nearer the economic collapse precipitated by its moral decline.

Or on the hand, don’t.

If you look at a currency converting site like x-rates.com then you can have the luxury of looking up the historical rates of exchange and see for yourself just how capricious the currency markets are. In September 1992 it took 2 dollars to buy one pound – then only 4 months later it took only 1.5. Now it’s back to 2 again but that’s the nature of the beast, it goes up and down, up and down.

Of course, travelers aren’t slow to cash in on these currency trends. When the poor Argentines lost 80% of their savings overnight in 2002, Buenos Aires became the new backpacker mecca of South America – educated people, good food and wine, sophisticated culture and all for 4 pesos to the dollar when it had been 1 to 1.

Brazil also was trading the real at over 4 to the dollar in 2002, boosting the number of travelers who could get their samba and cerveja cheap. Now a dollar only brings in 1.8 reais and if nothing else, the poor working girls in Rio must have seen the supply of sex tourists dropping.

Thailand’s baht dropped to half its value in 2000 and while it eventually recovered, Road Junky suspects it was an elaborate ploy to turn Thailand into South East Asia’s backpacker playground.

Will the dollar recover?

Foreign currency traders point out the new European economic bloc, the rise in China’s economy, the American credit crunch. There isn’t a single economist working at Road Junky (only an editor who got a D at high school because he refused to believe that supply and demand was a law) but just look around you; Western Union (may they go bankrupt, the thieving bastards) deal in dollars, Google’s internet advertising empire is based in dollars, 90% of the movies watched around the world are American as are 90% of the fast food, clothing and retail chains.

In short, America’s economy is really big and as it virtually owns the UN and the World Bank it’s still by far the most powerful country in the world. We’d all prefer that Sweden was ruling the world but the State of Denial is already over-populated.

So who knows? Currencies can only go up or down but in the end they usually do both. In the worst case that the dollar tanks, whole new backpacker scenes will open up in New York and Hawaii…