Friday, December 20, 2013

Cheap and Expensive Currencies

The Turkish Lira is currently hitting a record low to the US dollar at 2.095 TL whilst as measured by purchasing power parity, the lira remains at just over 50% undervalued to the US dollar (USD). If one earns USD as income, then Turkey remains a favorable spot for inexpensive travel.

The Russian ruble is also tremendously undervalued to the USD at approximately 45%. Tourist travel to Russia is affordable in most places as restaurant meals, souvenirs - gifts etc will provide for a bonus purchasing power for those with US dollars. A good restaurant meal with wine will likely set two diners back around $60 to $70 USD in many parts of Russia while the same equivalent type meal in the United States will be just over $100 USD.

South Africa is another country that provides for a sale on its currency for tourists.

Venezuela's currency is in free fall - hard currency is in significant demand as the local currency bolivar is now at threat to very high inflation.

Expensive currencies have Switzerland at the top of the list as the Swiss franc (CHF) is upwards of 60% overvalued to the USD as measured by purchasing power parity. A good restaurant meal with wine in Switzerland would be closer to $200 USD for two.

Norway is another expensive country to visit as is Australia. The Australian dollar is about 30% overvalued to the USD.

It should be noted that currencies can remain offside with purchasing power parity for several years but eventually they do ultimately correct in value.

For now, Turkey remains again for another year as one of the most affordable places to visit as measured by purchasing power parity currency valuations.