How exchange rates can affect your holiday
When you are going overseas, a small movement in rates can make a big difference to your budget.
A recent report that the Australian dollar has been buying unusually large amounts of Japanese yen is a timely reminder that exchange rates can significantly affect the cost of an overseas holiday.
The Reserve Bank of Australia (RBA) recorded an indicative rate of about 114.5 yen to the Australian dollar at the end of August 2026, although the rate available to travellers will usually be lower after fees and provider margins are included.
An exchange rate is simply the value of one currency compared with another. When the Australian dollar strengthens against your destination’s currency, accommodation, meals, transport and shopping generally become cheaper in Australian-dollar terms.
When it weakens, the same purchases cost more. Even a relatively small movement can make a noticeable difference when applied to several thousand dollars of holiday spending.
If the rate for your destination appears particularly favourable, one option is to exchange some money before leaving. You could buy foreign banknotes for expenses such as taxis, tips, markets, or your first day’s purchases.
Alternatively, you may be able to load foreign currency onto a prepaid travel card, locking in the exchange rate for that amount. This can provide certainty and make budgeting easier because you know approximately how much foreign currency you have available.
Travel cards may also hold several currencies, which can be useful on a multi-country trip.
However, converting your entire holiday budget at once is not the only or necessarily the best approach.
Some travellers exchange money in stages, perhaps buying a portion now and leaving the remainder to convert closer to departure or while overseas. This reduces the risk of committing everything at one rate.
Others use a combination of foreign cash, a travel card, and a low-fee debit or credit card. Having more than one payment method also provides a backup if a card is lost, blocked, or not accepted.
When exchanging money, always compare the total cost, not just the advertised rate. Check currency-conversion margins, card-loading charges, overseas transaction fees, ATM withdrawal costs, and fees for converting unused money back into Australian dollars.
Travel cards vary considerably, and some low-fee debit cards may offer more competitive rates. Keep cards in separate places, tell your bank about your travel plans if required, and carry only a modest amount of cash.
Most importantly, exchange rates constantly change in response to economic news and market conditions. A favourable rate today could improve further, but it could also fall before you leave or while you are away.
There are no guarantees, and accurately predicting currency movements is extremely difficult. Rather than trying to pick the perfect day, consider a strategy that suits your budget, destination, and tolerance for uncertainty.
Related reading: CHOICE, RBA, MoneySmart
Disclaimer: This article and any links provided are for general information only and should not be taken as constituting professional advice. National Seniors Australia is not a financial adviser. You should consider seeking independent legal, financial, taxation, or other advice to check how any information provided relates to your unique circumstances.
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