Remember the good old days when we were at parity with the US Dollar? Yeah, the good times had to end eventually, but there are some countries where the AUD is performing well.
In the last year or so the AUD has taken a beating against major world currencies such as the US Dollar, Great British Pound and the Euro, but there are a few countries where the Australian Dollar has a favourable exchange rate.
We’ve calculated how the Aussie Dollar has performed over the last year, as well as provided a reference point using The Economist’s ‘Big Mac Index’ so you can get a feel for how expensive things are in that country. (The Economist says a Big Mac costs $6.45 in Australia).
Of course, we haven’t compared all countries, as we don’t envision many Aussies heading to South Sudan any time soon, for example, so here are a few of the more popular destinations the AUD has performed well against in the past year. Keep in mind that exchange rates can and do change all the time.
The following exchange rate assessments were made on 31 January 2020.
Argentine Peso - ARS
The AUD is up a massive 48.95% against ARS. This time last year the AUD bought 27.11 pesos. At the time of writing it purchased 40.38 pesos.
It should be noted that Argentina is currently experiencing very high inflation levels of around 40-50%.
A Big Mac costs 171 pesos (or AUD $4.23)
Chilean Peso - CLP
The AUD is up 11.02% against the CLP. This time last year the AUD bought 481.68 pesos. At the time of writing it purchased 534.75 pesos.
A Big Mac costs 2,640 pesos (or AUD $4.93)
Brazilian Real - BRL
The AUD is up 7.55% against the BRL. This time last year the AUD bought 2.65 reais. At the time of writing it purchased 2.85 reais.
A Big Mac costs 19.90 reais (or AUD $6.97)
Turkish Lira - TRY
The AUD is up 5.53% against the TRY. This time last year the AUD bought 3.8 lira. At the time of writing it purchased 4.01 lira.
Note that this figure should be taken with a grain of salt as Turkey is currently experiencing high levels of inflation, around 10-12%.
A Big Mac costs 12.99 lira in Turkey (or AUD $3.23)
South African Rand - ZAR
The AUD is up 2.48% against the ZAR. This time last year the AUD bought 9.68 ZAR. At the time of writing it purchased 9.92 rand.
A Big Mac costs 31R in South Africa (or AUD $3.13)
Hungarian Forint - HUF
The AUD is up 2.34% against the HUF. This time last year the AUD bought 200.61 forints. At the time of writing it purchased 205.30 forints.
If you’re hungry in Hungary, a Big Mac costs 900 forints (or AUD $4.38)
Colombian Peso - COP
The AUD is up slightly at 0.62% against the COP. This time last year the AUD bought 2276.72 pesos. At the time of writing it purchased 2290.78 pesos.
A Big Mac costs 11,900 pesos (or AUD $5.18)
Norwegian Krone - NOK
The AUD is up 0.49% against the NOK. This time last year the AUD bought 6.13 krone. At the time of writing it purchased 6.16 krone, making it pretty stable.
A Big Mac is NKr53 (or AUD $8.60)
Costs and Considerations of Exchange Rates
There’s a few considerations to make before setting off to the countries with the most favourable exchange rates or the cheapest Big Macs.
International Transaction Fees
One of the main considerations is the fact that this comparison is using what’s called the ‘spot rate’, which is what you see on TV or on Google when looking at exchange rates. Your debit card or credit card may offer a poorer exchange rate or tack on extra fees for overseas use.
That’s why it could be a good idea to look into debit or credit cards with no international transaction fees, as well as no ATM fees.
Keep in mind that weak currencies may be that way because of its nation’s high inflation rates. Take Argentina for example, with its 40-50% inflation rate, as well as Turkey, which hovers around 10%.
This means that prices of goods can fluctuate wildly, and your Big Mac may cost a lot more in the future. High inflation could be due to political or economic instability, usually as a result of trade deficits and governments devaluing their countries' currencies to make their exports more attractive.
Aside from the cost of travelling, how safe a country is may also be a big consideration for you. Smart Traveller regularly updates its reports on countries around the world, and the ratings at the time of writing for the countries mentioned were:
Argentina: Exercise normal safety precautions
Chile: Exercise a high degree of caution
Brazil: Exercise a high degree of caution
Turkey: Exercise a high degree of caution
South Africa: Exercise a high degree of caution
Hungary: Exercise normal safety precautions
Colombia: Exercise a high degree of caution
Norway: Exercise normal safety precautions
Ratings can be determined by political and economic (in)stability, crime rates and terrorism, as well as outbreaks of viruses and other dangers. Please also note that Smart Traveller regularly updates these ratings, and even something we take for granted in Australia, such as a federal election, may cause violence and protests elsewhere.
The Big Mac Index: A Flawed Metric?
While the Big Mac Index is a fun way to look at what’s called ‘purchasing power parity’ to determine like-for-like cost of goods in different countries, there are a few flaws. One of the biggest ones is that a country may have high taxes on fast food or sugary drinks, thus disproportionately inflating the price. The second flaw is that countries dominated by different religions may limit or ban the use of beef, thus influencing the Big Mac Index. The third flaw is that regional differences exist: a Big Mac may be priced differently in New York City compared to Little Rock, Arkansas for example. The fourth is countries may have to import ingredients used to make a Big Mac, inflating the price. The Big Mac Index is a useful guide, but there’s more to consider when it comes to travel costs.
Savings.com.au's two cents
The Aussie dollar has taken a beating against many currencies in the last few years - both major and minor. While it’s useful to look at countries where our dollar is performing strongly, it’s not the be all and end all of travelling. There’s a lot of other considerations to make, and just because a country is cheap doesn’t necessarily make it enjoyable or even safe to travel to. While getting more bang for your buck travelling to these destinations is tempting, it could be a good idea to pick a place you actually want to travel to.
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