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Australians Swerve Thai Holidays with Exchange Rates in the Gutter

With AUD-THB at a 10-year low, Australians travelling this year to Thailand's wildly popular resorts are facing holiday costs 50 percent higher than those paid in 2012. With exchange rates as they are, those in Oz are choosing better-value destinations.

Posted Jun 23, 2019

The Australian dollar ended last week buying only 21.3 Thai baht, marking the lowest exchange rate since October 2008, and 24 percent less than the past decade’s average rate of 28.0 baht.

In 2012, AUD-THB averaged 32.2, meaning that holidaymakers at the time paid roughly A$124 for a typical 4-star hotel room, priced at ฿4,000; they now pay 52 percent more for the same room, which costs A$188.

The Australian dollar has been under tremendous pressure since February as traders have ramped up bets on aggressive interest-rate cuts by the RBA — bets that will only increase unless unemployment drops quickly or if there isn’t a thawing of trade tensions between the US and China.

In stark contrast, Thailand’s baht has been among the star performers of the year and it continues to defy expert opinions suggesting valuations have gotten too high.

The baht has been supported this year by Thailand’s large current-account surplus and following speculation that Thai stocks will soon be assigned a larger weighting in the MSCI Emerging Markets index, which would result in significant amounts of foreign capital entering Thailand.

Tourism data suggests that Australians are all too aware of what they’re now paying to experience Thailand’s beautiful islands and temples. In 2018, when AUD-THB averaged 24.0, only 790,000 Australians visited Thailand, yet in 2012 when rates were in the 32s and 33s, 18 percent more (930,000) made the trip to the Land of Smiles.

With exchange rates as they are, those from down under are on the lookout for better-value travel opportunities, the latest of which — and the undoubted surprise of 2018 — is Sri Lanka.

A single Australian dollar now buys 122.4 Sri Lankan rupees (LKR), 30 percent more than in September 2015 when rates fell as low as 94.0. The number of Australian visitors to Sri Lanka reached a record last year and numbers are up 400 percent over the past decade.

Holidays to Indonesia have also held up — the country welcomed a whopping 1.4 million Australians last year — as has the AUD-IDR exchange rate, which on Friday precisely matched the 10-year average rate of 9,810.

Unfortunately for Australian travellers, value-seeking will remain the order of the day because AUD forecasters expect more currency weakness before year-end and into 2020.

Commenting on the Australian dollar this weekend were analysts at Westpac, who reaffirmed an earlier prediction for depreciation worth 5 percent over the coming year.

Writing on the benchmark Aussie rate, AUD-USD, Westpac wrote: “If, as we expect, two cuts from the FOMC in 2019 stabilises growth … while Australia remains weak, then a further leg lower in the Australian dollar will be seen to around USD 0.66 in the first half of 2020.” The pair settled last week at USD 0.693.

Please note that the opinions of our authors are their own and do not reflect the opinion of Best Exchange Rates and should not be taken as a reference to buy or sell any financial product.