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How Currency Swings Can Affect Your Holiday Costs?


Rise and fall, variation or shift in the floating exchange rate system is a norm in the case of most major economies. The currency’s value goes hand in hand in accordance with the foreign-exchange market. International money exchange rates are affected by numerous factors that are usually in a state of perpetual flux. These include interest rate differentials, economic performance, supply and demand of the two currencies, and inflation. If you run a travel business, you’ll directly be impacted by fluctuating currency rates. The relative strength, or lack thereof, of the dollar against other major currencies will dictate your business traffic.

Travel Trends: A Lot of people travel for leisure than for business. Travel, just like any other activity, experiences trends that tend to develop based on various forces. Unsurprisingly, trends can be set by the media. Specifically, travel media may establish some trends based on tourism surveys and other professional research, developing campaigns geared toward promoting destinations that are in vogue. Based on this, your business will likely handle travelers to Asian city tours, exotic beaches and other niche travel such as destination weddings or honeymoons. But over time, trends will be influenced by the state of the global economy, and currency exchange rates have a large impact.

Effect of Appreciation: Travelers to foreign countries have to convert funds to that particular country’s currency so they can spend money at hotels, restaurants, and other attractions. For example, when the U.S. dollar appreciates against major world currencies, U.S. tourists traveling to other countries will be able to enjoy more — the exchange rate will favor them when they exchange their dollars. You’re likely to see more business as travelers take advantage of the strong dollar to visit various places for sea, sun and sand, and a host of other exotic attractions.

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