3 last-minute destinations to get the most out of your Aussie dollar

There are two things wanderlust-filled travellers know all too well: holidays can be expensive, and the strength of a currency can make or break your budget.

To help, we've pinpointed destinations where the Aussie dollar stretches further-and flagged spots where it doesn't-so you can travel the world without overspending.

By understanding currency trends and exchange rates, you can make smarter decisions and maximise your hard-earned dollars.

Where to go: Japan ($1 = ¥99.04)

A Yen for adventure

Japan is an iconic destination for many, offering a unique blend of ancient traditions and modern marvels. From the bustling metropolis of Tokyo to the serene beauty of Kyoto, there's something for everyone.

And with the current exchange rate, your Australian dollar will go further than ever.

The Japanese Yen has significantly weakened in recent years. Back in March 2020, one Australian dollar bought around 66.5 Yen, but by June 2024, that had soared to 108 Yen.

"Japan is the standout in terms of where the Aussie dollar has strengthened relative to a lot of other currencies," says Peter Moussa, senior investment specialist at NAB Private Wealth.

This shift comes down to interest rate differences.

As Moussa explains, "Over the last few years, much of the developed world had an inflation problem. As inflation goes up, central banks combat that by hiking interest rates. If one country raises its interest rates while another country keeps its interest rates low, the country with the higher rates will generally have a stronger currency."

While many countries, including Australia, raised interest rates to combat inflation, Japan maintained low-interest rates to stimulate its economy. This disparity in interest rates has led to a weaker Japanese Yen, making it a more affordable destination for Australian travellers.

Where not to go: USA ($1 = US0.65)

The good days are gone

Not long ago, travelling to the US was a dream come true for many Australians. Back in 2011, the Aussie dollar was at parity with the US dollar, buying US$1.03.

That era was fuelled by Australia's mining boom, which boosted the economy and strengthened the currency. But as the boom faded and inflation rose, the tables turned.

"If I was to give you the currencies where we've weakened the most, the US is actually one of the standouts" says Moussa.

Additionally, the Federal Reserve's aggressive rate hikes have pushed the US dollar higher, while Australia's cash rate remains lower at 4.35% compared to the US's 5.50%. As a result, the Aussie dollar is now worth just 65 US cents, making holidays to the US significantly more expensive.

Adding to the challenges, the Trump presidency could further strengthen the US dollar. Many economists note his policies, which often prioritise American interests, could be inflationary. If US inflation were to rise, rates could be left higher for longer.

So, while the US remains a dream destination for many, the current exchange rate makes it a less affordable option for budget-conscious Aussies.

Where to go: Indonesia and New Zealand

$1 - IDR10,289; $1 = NZ$1.10

Value across the ditches

Closer to home, Indonesia and New Zealand remain excellent options for Australians seeking value.

The Aussie dollar has strengthened 12% against the Indonesian Rupiah since February 2020, making a trip to Bali or other islands more affordable.

"I'd put Bali second only to Japan, as they've had a weaker currency," Moussa says. "Yes, things cost a little more than previous years, but on a relative basis, it's still great value."

New Zealand, famed for its fjords and lush landscapes, has also become more accessible. While the Kiwi dollar was previously strong due to aggressive rate hikes, economic shifts are changing the picture.

"New Zealand has already started to aggressively cut rates," says Moussa. "Their growth is taking a hit, and markets are anticipating further rate cuts, which is reflected in the currency today."

Where not to go: United Kingdom and Switzerland

$1 = 0.51 GBP; $1 = 0.57 CHF

European dreams, Australian budget

The UK and Switzerland, while offering incredible experiences, remain some of the most expensive destinations for Australians.

Since 2012, the Aussie dollar has plummeted against the Swiss Franc, falling from parity to just 0.57 CHF. Similarly, it has dropped against the British Pound, now sitting at 0.51 GBP, compared to 0.69 GBP in 2013.

Switzerland's strong economy and financial stability, coupled with Australia's reliance on commodities, have made its currency a tough one to compete with.

Sheltered from the European debt crisis, the Swiss currency has even strengthened against its neighbour's, with one Swiss Franc now worth 1.07 Euros.

While NAB predicts a slow recovery for the Aussie dollar against these currencies, these destinations will remain pricey in the near term.

Final tips for savvy travellers

For those planning their next trip, Moussa offers a final piece of advice: "If you decide to convert currency now, remember you won't be earning interest on it. That's part of why the yen is weak-it's a low-yielding currency. If you've got a mortgage, consider keeping your money in your offset account until you need it."

And don't forget travel insurance. A good policy can protect you from unexpected expenses, whether it's medical emergencies or trip disruptions.

By staying informed and planning ahead, you can stretch your Aussie dollar further and enjoy your adventures without breaking the bank. Bon voyage.

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