U.S. Dollar a Winner in Canada and Europe

If money mattered most--that is, if the plight of the dollar determined all transatlantic itineraries--then maybe we’d all be visiting Moscow or Istanbul this summer.

After all, Russia and Turkey are two European countries where the dollar has gained the most ground in the last year.

But money isn’t everything, and sensible travelers think about far more than just buying power. Especially now, with bombs dropping and refugees afoot in Yugoslavia. The NATO-Serbia conflict has chased cruise ships away from the Adriatic ports of Dubrovnik and Venice and led travelers not only to avoid that region but in some cases to think twice about nearby Greece and Turkey.

Still, the European Travel Commission is expecting a lot of us this summer, and we’ll no doubt be spending a lot of money. The commission, which counted 5.68 million American visitors to Europe between May 1 and Sept. 30 last year, is projecting 5.95 million American visitors for the same period this season, and 11.5 million Americans for the year.

Once you’re on the ground in Europe, rooting through your pockets and squinting at strange signs, dollars do matter. The good news, as our domestic economy rumbles along on the longest sustained boom since World War II, is that the greenback has gained ground against most of its European counterparts in the last year.

Here, with the opening of the summer travel season at hand, is how the dollar fares in Europe and Canada. Unless otherwise noted, the figures below compare exchange rates from May 18, 1998, with those of May 18 this year. The rates quoted are the “wholesale” trading rates used by banks in transactions of $1 million or more, which are the best indication of the rate you’ll get if you use a credit card.

(Next week’s column will touch on the Mexican peso.)

* The euro. Though euro coins and bills won’t enter circulation until January 2002, the 11 European nations united behind the euro have had their currencies bound together by it since Jan. 1. Now they march in lock-step against the dollar and the rest of the world. As the French franc fluctuates against our currency, so fluctuates the German mark, the Italian lira, the Irish pound and the currencies of Austria, Belgium, Finland, Luxembourg, the Netherlands, Portugal and Spain.

Given that fact, Americans can be glad that since the euro’s birth it has lost value against the dollar. In the early weeks, it took $1.15 to $1.20 to buy a euro, but by mid-May the dollar had gained 7% to 11%, and the price of a euro was about $1.07. That gain, combined with the earlier independent fluctuations of the European currencies, leaves the dollar up 3.9% against the Spanish peseta over the last year; up 3% against the Italian lira; up 2.7% against the French franc; and up 2.6% against the German mark.

* Britain. The dollar’s been flat at 62 pence per $1. And travel to Britain is booming, keeping prices up, especially in London.

* Canada. The U.S. dollar bought 1.45 Canadian dollars in May 1998, 1.47 earlier this month. Our dollar has been remarkably strong against theirs for more than a year, and trips north of the border lead to excellent values, even in big cities like Vancouver.

* Czech Republic. Another bargain country. A dollar bought 32.6 korunas last year, 35.5 korunas this month. Dinner in Prague is easily had for under $10 a head, and a beer is usually about $1.

* Denmark. A dollar bought 6.73 krone last year, 6.96 this month.

* Greece. A rare downturn. A dollar bought 307.5 drachmas last year, but only 304.7 in May.

* Norway. A dollar bought 7.38 krone last year, 7.70 this month.

* Russia. A dollar bought 6.15 rubles in May 1998, but after a year of Russian economic retrenchment, it buys a whopping 24.79 rubles. (That doesn’t mean you can get a cheap hotel room. Many businesses serving foreign visitors tie their prices to the dollar.)

* Switzerland. Basically flat. A dollar bought 1.49 francs last year, 1.50 this month.

* Turkey. Big gains for the dollar, amid big inflation. A dollar bought 253,780 Turkish lire last year, 395,327 this month. (Which means that if you’ve got $2.53, you could be a Turkish millionaire.)

The next question is how to get the best exchange rates, a perennial challenge for Americans abroad.

The issue has been muddled this year by several of this country’s biggest banks, which have added foreign exchange fees of 1% to 3% to all credit card charges in foreign currencies. Yet despite those fees, buying via credit card is still usually the best way to get a good rate. The reason: Credit card purchases are usually transacted at rates close to the wholesale rate used when banks swap money in multimillion-dollar deals.

The next best option is to trade dollars or travelers’ checks for local currency at a bank. (ATM exchange rates are based on those good bank rates, too, but using them makes you vulnerable to charges for use of the machine. And hotel ATMs have begun to levy annoyingly large transaction fees. In recent weeks at the Hyatt Regency San Diego and the downtown L.A. Inter-Continental Hotel, lobby ATMs have charged me $2.50 for a quick withdrawal.)

Hotel front desks and airport exchange kiosks usually offer the very worst exchange rates. Yes, those airport kiosks are convenient; using one might make sense if you’re just changing enough money to pay for a taxi ride upon arrival. But consider two examples:

Thomas Cook Foreign Exchange was selling British currency to tourists at 56 pence per dollar in early May, while banks and credit-card users were swapping those currencies at about 62 pence per dollar. Cook was selling Belgian francs at about 34 to the dollar versus a bank rate of about 38. In my experience, many airport exchange desks operate at margins close to that. Thus, if you trade $1,000 at an airport exchange booth instead of spending it via credit card, there’s a good chance you’re losing $100 or more in buying power.

For more background on Europe this summer, the European Travel Commission, telephone (800) 816- 7530, e-mail dnmco@aol.com, is offering a free 68-page brochure on “Planning Your Trip to Europe.”