Where to go to make money go further

April 24, 1994|By Christopher Reynolds | Christopher Reynolds,Los Angeles Times

Most Americans heading to Europe this year -- and the European Travel Commission predicts that there will be a record 8 million -- will arrive with this question hanging somewhere in their heads: How far will our money go?

The answer is far indeed, if your destination is Italy, Spain or vTC Portugal, and if you're comparing this year's prices with those of last year and the year before that.

If you're bound for Greece or Turkey, the dollar's exchange numbers will cheer you up. But inflation has been grinding away at the drachma and the Turkish lira, and your dollars will be left with only slightly more clout than they had last year.

Similarly, if you're bound for England, France or Germany, your 1994 dollars will carry essentially the same weight that 1993 dollars did.

Michael Wallace, a senior analyst for Ruesch International Financial Services, sees a stronger dollar in coming months -- though, as usual, jarring political developments could change that.

Here's a quick look at the dollar's prospects in several popular European destinations. The exchange rates quoted below come from Thomas Cook Foreign Exchange, as reported on March 25, 1992; March 23, 1993 and March 22, 1994.

(Travelers should keep in mind three important caveats. First, rates vary from one company to another. Second, you may get better exchange rates at financial institutions in foreign countries than in the United States. And third, the rates below are those available to individual travelers. Other statistics use the rates granted to currency traders dealing in $1 million or more. Those rates are 2 to 5 percent more advantageous than the rates individual travelers get.)

In England, a dollar bought 55 pence two years ago, 65 pence one year ago and 64 pence last month. Inflation ran 2.4 percent in the year ended in February. Travel management firm Runzheimer International, which calculates rates for executives using first-class hotels and restaurants, in February 1994 set its daily London figure at $315.85.

In France, a dollar bought 5.31 francs two years ago, 5.25 francs one year ago and 5.45 francs last month. Inflation barely existed, running 1.7 percent in the year ended in February. But Paris may never be cheap. Runzheimer's last per diem figure there, set in August, was $352.80.

In Germany, Austria, Belgium, Holland, Ireland and Switzerland, fluctuations of the dollar against local currencies have been relatively minor in the last year, and inflation rates have run at or below 3.4 percent.

Now to the countries that seem to offer larger bargains:

* Italy. In March 1992, a dollar bought 1,178 lire. In March 1993: 1,488 lire. Last month: 1,570 lire. That's a 33 percent gain over two years. Runzheimer cut its daily rate for Rome from $349.85 in August, 1992, to $259.25 last August.

* Spain. In March 1992, a dollar bought 96.6 pesetas. In March 1993: 107.7 pesetas. Last month: 128.1 pesetas. Runzheimer, which assigned Madrid a $359.05 per diem figure in August 1992 slashed it to $260.60 last August.

* Portugal. In March 1992, a dollar bought 129.87 escudos. In March 1993, 137.63 escudos. Last month, 158.1 escudos. Runzheimer's per diem for Lisbon has fallen from $245.75 in February 1993 to $192.40 in February 1994.

* Greece. In March 1992, a dollar bought 172 drachmas. A year later, 200 drachmas. Last month, 222 drachmas. That's a 29 percent gain, but against inflation it's 11 percent for the year ended in February, 14.5 percent the year before. Runzheimer, which was assigning Athens visitors $249.35 in February 1992, adjusted that to $251.30 in February 1993 and $259.15 in February 1994.

* Turkey. Turkey's economy leaves an outsider wishing everyone would just hold still for a moment. In March 1992, a dollar bought 5,263 Turkish lire. In March 1993: 7,874 Turkish lire. Last month: 19,231 Turkish lire -- up 265 percent in two years. Meanwhile, inflation advances at an estimated 70 percent per year, neutralizing nearly all of the gain. Runzheimer gave Istanbul a $221.40 per diem in February 1992, cut it to $204.95 in February 1993, then cut it again, ever so slightly, to $203.05 in February 1994. Bring a calculator.

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