Diversify Your Currency Risk on Vacation

Currency exchange risk is not something many travelers think off – but you should – especially if you intend to do a trip of one month or longer. Your new best friend should a be site which has an on-line currency converter so that you can check the relevant exchange rates for your trip on a regular basis both before leaving home an while you are on the road.

These days few people use all the travel cash to buy traveler’s checks in advance of their trip. That’s because there are lot better options for today’s traveler – which also gives you some options to manipulate the exchange rate in your favor. Remember its not impossible for a currency to devalue up to 30% in a few short months. That could mean your trip costing 30% more, or less.

No one can predict which way a currency is going to move, particularly in the short-term. So for the traveler the important thing to do is to manage the risk. Diversify the exchange rates that you use. Educate yourself about the average currency exchange rate for your home and destination currencies.

For example you can manage your expenditure – so that some is made before the trip by pre-paying hotels, flights and tours. Or buy a pre-paid travel card which locks in the exchange rate of the day.

Much of holiday costs will be while you are on holiday – day-to-day cash that you spend in the markets, hotels and tours that you haven’t pre-booked. Use ATM cards and foreign and local cash for these expenses and you are using a different rate of exchange.

If, however, you think the exchange rate is not in your favor while you are on vacation then delay your currency exchange by using your credit card and delaying the charge into your own currency for a few days, or weeks depending on the credit card processing system.