America has had a rough 2022, but the dollar is having a good year. For the first time since 2002, U.S. currency is at parity with the euro, meaning one dollar trades at roughly one euro. That represents a significant drop in value for the European currency, which was worth around $1.47 back in 2008 and around $1.14 at the beginning of this year. And it’s not just the euro—the dollar is way up against a long list of currencies, including 19 percent against the Japanese yen. That means it’s a good time to travel abroad, where your dollar will literally take you farther. But it’s also a good time to import a bunch of crap at a discount.
Why is the dollar so strong right now?
The reasons for the euro’s collapse are varied and obvious. The war in Ukraine, an ongoing acute energy crisis, global inflationary pressures, and a slow-to-react European Central Bank: put them together and you have a recipe for devaluation. Some of the same factors are to blame for the yen’s rapid slide.
At the same time, the dollar is raging. The Federal Reserve has spiked interest rates, making investing in U.S. Treasury bonds more attractive. And despite our own economic turmoil, the U.S. economic indicators remain strong in many ways.
What does this mean for you? Your money is worth more in the 19 euro countries than at any time in the last 20 years. It’s worth 19% more in Japan today than it was in January. In essence, buying in dollars is like getting an automatic discount on anything you buy in (or order from) Europe or Japan. Something that costs €15 would have run you close to $18 not so long ago, but today will cost you just $15. So how can you take advantage of this historic (and probably transient) situation?
Everything from Europe and Japan is on sale—for now
There are essentially two ways you can take advantage of this situation: Travel and buying stuff.
Travel. Traveling to Europe is suddenly significantly cheaper if you’re paying in dollars, and that’s the most direct way to take advantage of the strong U.S. currency. If you budgeted a European vacation a few months ago, that money is now going to go much further than you thought, and you can probably add a slew of upgrades and extras you might not have been able to afford previously. Traveling to Japan is always expensive, but it is now…less expensive.
The great thing about this “discount” is that it’s a blanket effect that applies to literally every cent you spend. Every incidental—every snack, bottle of water, ticket upgrade, restaurant meal, or guided excursion you purchase while traveling in Europe will be automatically 15 percent cheaper, give or take.
Shopping. If you’re planning to travel to Europe or Japan soon (lucky!), do some extra shopping while you’re there to take advantage of the situation. Buying clothing or tech devices might cheaper there in the short-term, depending on the item (and assuming you don’t need to pay extra to ship it home). Stocking up on cosmetics, yarns and fabrics, or other goods while traipsing through gorgeous European cities is the most cost-effective way to make your strong dollars really count.
If you’re not in the mood to hop on a plane, you can still benefit from the dollar’s strength by shopping up a storm—anything imported from Europe or Japan will be cheaper in real terms, including cars, computers and devices, clothing, and luxury brands.
Of course, as shipping and handling costs will still be a factor, you’ll have to do the math to ensure they don’t wipe out any perceived discounts. That’s why it’s an especially good time to import stuff you can’t easily buy in the U.S., from fancy European foods to anime merch from Tokyo.
This situation won’t last forever, so if you’ve got the time, energy, and funds to take advantage of the strong dollar and reeling foreign currencies, don’t sleep on ordering that giant Totoro.