Breakfast in, shopping out: tourists to the U.S. hit by soaring dollar

SAN FRANCISCO/NEW YORK/LONDON (Reuters) - In the weeks before heading to San Francisco for vacation this month, Jeff Skipper and his wife Valerie, of the United Kingdom, watched helplessly as the US dollar continued its rapid climb. against the British pound.

The GBP/USD exchange rate - which has fallen to a record low this week - has slashed the couple’s already high-end Golden Gate City project affordability, forcing them to save on some holiday luxuries.

“The exchange rate has been the biggest topic of discussion since we got here,” said Jeff Skipper, 50, an electrician.

“Everything is too expensive for us,” said Valerie, 47, a university principal.

“We’ve been buying food from groceries rather than sit-down meals because when you change it to British quantity, it doesn’t seem like it’s worth it. It’s really big money.”

The pair were among a crowd of visitors to the US feeling the crunch of the strong US currency, which climbed to a two-decade high this month driven in part by the Federal Reserve’s rate hike. Read more

For British tourists in the United States, the pain of the dollar outbreak was exacerbated by the collapse of the pound, which entered a near-free fall on Monday after the British government announced unfunded tax cuts that sent investors fleeing. Read more

The pound hit a record low of $1.0327 on Monday, having fallen 20 percent against the dollar this year. It was trading just above that on Wednesday at $1.0888.

“It’s now a dollar to a pound… it really hit us,” said Colin Taylor, a retired telecom engineer from the UK who was visiting San Francisco with his wife now.

“We had breakfast and it cost 50 pounds, 50 pounds, you know. And if that was at home, it would be 20 or 25 pounds. So it’s a big, big jump for us.”

‘very high’

While the pound has seen some of the wildest swings in recent days, currency markets across the board have seen massive volatility amid heightened geopolitical tensions and interest rate hikes by the central bank to tame spiraling inflation.

The relative strength of the US economy allowed the Federal Reserve to raise interest rates more aggressively than its peers, however, it pushed the dollar higher against the British pound, the euro and the Japanese yen, as well as a large number of smaller currencies.

The dollar index, which measures the greenback against a basket of currencies, hit a 20-year high of 114.78 on Wednesday. Read more

“The dollar is very high. So we’re spending, but not the way we’d like,” said Jose Alfado, a 48-year-old public accountant from Argentina who was visiting New York with his wife and two daughters.

“We go to cheaper restaurants…we go to the Disney Store and we don’t pick everything up. We just look and then we go.”

However, with the lifting of COVID-19 travel restrictions, international spending on inbound leisure travel to the US - adjusted for inflation - is expected to reach $87 billion this year compared to $33 billion in 2020 and 2021, and $145 billion in 2019 , the American Travel Association reported in June.

Some tourists say they won’t let the strength of the dollar spoil their fun.

“I have to enjoy New York,” said Gilles Nolorgis, 48, an app designer from Paris.

‘monopoly money’

For travelers outside the US who have dollars in their pockets, spending is easy.

With the dollar and the euro reaching parity for the first time in 20 years in July, US tourists were bragging about buying luxury goods in Paris as well as enjoying cheaper food in London’s West End, Reuters reported. Read more Read more

Americans spend 11% more on inbound and outbound travel in 2022 than in 2019, according to consumer survey data compiled by the American Association of Travel Consultants, a trade organization.

“It feels like we’re spending Monopoly money,” said Ike Armstrong, 26, of California, speaking near London’s Trafalgar Square.

In Bali, Indonesia, 39-year-old Johnny Folin of Los Angeles, California, said the strong dollar allowed him to indulge more in food, good drinks, and massages than he would otherwise have. The US dollar is up about 7% against the Indonesian rupiah this year.

“(For) bringing the US dollar here, it’s the best time of all time,” said Paul Speight from behind a currency exchange office in Wollongong, south of Sydney, Australia.

The US dollar has gained about 10% over the Australian dollar this year. “This really helps the purchasing power come in,” Speight added.

(Reporting by Noel Randewicz in San Francisco, John McCrank in New York, Alun John in London, Ananda Theresia in Jakarta and Tom Westbrook in Sydney; Additional writing and reporting by Michelle Price; Editing by Deepa Babington

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