The plummeting euro has been all over the news the past few months. In a strange twist of fate, the non-Chavez-leaning countries of Latin America are looking like models of fiscal stability now compared to their colonial cousins in Spain and Portugal.
The euro is at its lowest level in five years against the greenback as the flight to safety continues. So what does that mean for your travels to Latin America?
Not much, actually. As I’ve pointed out on here before, many of the currencies in Central America and South America move in lockstep with the U.S. dollar. In Ecuador and Panama, the dollar is the currency—you don’t even need to change money upon arrival. In others, like Honduras and Belize, there is a very narrow trading range.
The most volatile exchange rates are the ones attached to the most developed roaring economies: Chile and Brazil. Expect a lot of volatility if you’re heading to those commodity-rich nations. Things are a little brighter right now though: the dollar is up 6% in Brazil and 7.1% in Chile since the new year started.
The bad news is, that’s coming off a very strong 2009 for those currencies. The news is worse elsewhere, with the dollar faltering a bit against the currencies of Colombia, Guatemala, Peru, Uruguay, and Costa Rica. Not by much though—the declines are all under 5%.
Mexico is basically flat for the year, which means around 12.5 to the dollar—still a great exchange rate in historic terms. Argentina is still hovering around 3.9 to the dollar, after being at 3-to-1 before last year. (Unfortunately, they’re making up for it with high inflation and increased visa fees upon arrival.)
Does any of this matter if the changes aren’t dramatic? Not a whole lot for your biggest expenses. If you book a tour with a company marketing to North Americans, they’re pricing things in dollars anyway. Most luxury hotels set their rates in dollars as well in this hemisphere, with Brazil being the main exception. Latin America real estate may or may not be priced in the local currency: it depends on the target market and the location.
Where you really lose or win is when you buy things or services that are priced in local terms. When the dollar is strong, you will pay less for taxis, restaurant meals outside the hotel, and excursions you book with a local company not affiliated with your hotel. Local flights will usually be in the local currency, except for places like Peru and Argentina where they like to play the game called “soak the foreigners.”
Naturally if you’re living somewhere for a while in a vacation home or retirement home, these fluctuations matter more. They then affect your property expenses and labor expenses.
To see historic exchange rates, follow this link to fxtop.com