 How does a weaker dollar impact US vacationers? |
Source |
American Shipper |
Post Date |
07/15/2025 |
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Dollars 10% decline against foreign currencies in 2025stretches American travelers budgets despite cheaper airfare
The decline in the value of the U.S. dollarthis year has made Americans vacations abroad more expensive than in recentyears, which could stretch travelers budgets more than anticipated.
So far in 2025, the U.S. dollar has declined about 10% relative to abasket of popular foreign currencies, according to The Wall Street JournalsU.S. Dollar Index (DXY).
The weaker dollar means that Americanspurchasing power overseas is generally lower than it was in the past few years,with vacationers facing relatively higher prices.
"Welcome to inflation again," ClintHerson, managing editor at The Points Guy, told FOX Business. "Yourelooking at prices being anywhere from 8% to as high as 14% higher across theboard, especially in Europe, due to the weakness of the U.S. dollar."
"To put it in perspective, the U.S. dollarhas been on a multiyear tear, so weve really benefited the last couple ofyears ?its just with the way things are now, prices are going to be slightlyhigher than they have been the past couple of years for Americans traveling to Europe specifically and also Asia,especially Japan," he said.
Herson noted that those who had alreadylocked in prices months ago may not see the impact on that line item of theirtravel budget ?though the dollars decline is likely to still be felt in otheraspects of travel sping.
"Hopefully most folks have already lockedin their hotel prices, so theyre not going to be paying a lot more forhotels," he added.
"But food costs, transportation costs?everythings going upin price."
One bright spot for travelers budgets can befound in relatively cheaper flights to and from vacationersdestinations, Herson noted.
"The good news is, Im calling this thesummer of savings when it comes to airfare, because prices are downsubstantially for airfare, so hopefully any more expense youre paying whenyoure traveling has been sort of balanced by cheaper airfare," he said.
The dollars recent downturn comes after it wasrelatively stronger than foreign currencies in the last few years.
David Bahnsen, managing partner and chiefinvestment officer of the Bahnsen Group, told FOX Business that the main reason"is the fact that it had gone up 10% the year before, and in 2025 was justgiving that move back."
"The DXY right now is basically where itwas three years ago ?not higher or lower, though it spent most of the lastthree years higher than it is now, and it spent most of the ten years beforethat lower than it is now," he said.
The volatility and downward tr the dollarhas experienced this year stems from uncertainty over trade policy and tariffs, as markets take the highercosts into account.
"The specific catalyst besides the factthat it was over-priced relative to other currencies and due for a correctionis this trade and tariff volatility. Imports get more expensive with a weakerdollar even as exports get cheaper," Bahnsen noted.
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