The Aussie dollar has hit a six-month high, giving travellers the confidence to head overseas to spend their hard-earned cash.
The Australian dollar reached more than 67 US cents for the first time since early January this month.
Capital.com senior financial market analyst Kyle Rodda said the positive swing was down to two major factors: the US economy and the Reserve Bank of Australia.
Mr Rodda said there were “signs” the US Federal Reserve would have the ability to lower interests rates relatively soon.
“The markets are pricing in that it’ll be cut in September, and they’re now pricing in again that there will be two cuts before the end of the year,” Mr Rodda told NewsWire.
“Inflation will hopefully move back to the Federal Reserve target.
“The opposite is happening in Australia with the possibility the RBA will have to raise rates again.”
Inflation rose by 4 per cent in the 12 months to May, according to data released by the Australian Bureau of Statistics on June 26.
While Mr Rodda said there was a risk that July’s inflation data would provide another blow to the Australian economy, he predicted the Aussie dollar would continue to rise.
On July 5, the Australian dollar was at or near a one-year high against the Euro, the Chinese Yuan and the New Zealand dollar.
It has also hit a 30-year high against the Japanese Yen off the back of a weakened currency.
These encouraging milestones has meant Aussies are turning their attention to international travel.
A recent MasterCard Travel Trends report found tourism was “booming” overseas, especially across the Asia Pacific region.
“Consumer spending on tourism remains robust in 2024,” Mastercard Asia Pacific chief economist David Mann said.
“The report also found that Australian tourists are actually the highest spenders worldwide on experiences and night life, spending nearly one out of every five holiday dollars on these activities for the 12 months through to March 2024.
“When it comes to spending, costs do matter.
“In today’s economy, foreign exchange rates and spending power have become vital components in driving a traveller’s assessment of value when they are making their plans – so it’s reasonable to expect that a stronger dollar would drive spending for Aussies while abroad.”
As the globe waits for the US Federal Reserve to announce its plans moving forward, Mr Rodda said the US dollar would continue to weaken, leaving those in Australia hopeful of ticking off some of their international bucket-list destinations sooner rather than later.
“There is a bit of a lag effect but the currency is moving in the right direction,” he said.
“But you don’t leave tomorrow, you leave in six months time when (the strong Aussie dollar) becomes more attractive to go overseas
“For those about to head over and escape the winter, at least very slightly, the trip is a little less costly when the Australian dollar was in the mid-60s.
“Potentially, it might shave a little bit off the cost.”
Mastercard vice-president of cyber and intelligence Mallika Sathi urged those taking advantage of the strong Australian dollar to ensure their money was secure while travelling.
“While Aussies are back travelling again post pandemic, they’ve forgotten some of the safer forms of payment and where to stash their cash when travelling,” Ms Sathi told NewsWire.
“They’re reverting to carrying cash which isn’t always the safest in certain countries and destinations.
“They’ve forgotten they can still use their prepaid or digital wallets.”
Her advice comes off the back of Mastercard research that found 32 per cent of Aussie travellers stashed their cash in everyday items like sunscreen bottles or socks while overseas.
“There are pros and cons. The disadvantages of cash is you might end up paying more than you need to for that good or service,” Ms Sathi said.
“You’re paying for premium as they spot a tourist a mile away.
“In those scenarios, it’s better to book ahead in your home country. You can plan ahead.
“Where ever possible don’t carry large quantities of cash.
“If you have to carry cash, minimise what you’re carrying on your persons or leave it in the hotel safe.”
The Mastercard research also found travellers were coming home with $853m every year in unspent foreign cash, with 68 per cent admitting they do not exchange it back into Australian dollars.
Ms Sathi said travellers shouldn’t be worried about digital wallets and should consider the benefits they offer when travelling, including travel insurance and locking in currency exchange rates at a good price.