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Thursday, October 09, 2008

Not Lost in Transaction

With the economy of the United States weakened under the pressure of the financial crisis, decreases in the value of the U.S. dollar against foreign currency has negatively impacted American travelers abroad. Compared to a year ago, the dollar has lost 10 percent of its value against the Euro, for example, despite temporary rebounds. On top of the bad news about exchange rates, travelers incur fees and service charges for foreign currency exchanges.

However, there are places where the dollar is not only relatively strong,but also considered legal tender, eliminating those pesky fees and exchange rate headaches altogether.

Panama has been accepting U.S. dollars alongside its balboa since making an agreement with the U.S. government in 1904. On a recent trip to Panama, I breezed through the international airport—bypassing the currency exchange booth—into a waiting taxi. The driver happily took my $4, and I got a jump start on my vacation. And, I might add, the $22 oceanfront room on Boca Brava Island was easy on my pocketbook.

Ecuador (2000), El Salvador (2001), and East Timor (2000) all adopted the dollar. The former members of the U.S.-administered Trust Territory of the Pacific Islands, which included Palau, the Federated States of Micronesia, and the Marshall Islands, chose not to issue their own currency after becoming independent, having all used the U.S. dollar since 1944. Two British dependencies also use the U.S. dollar: the British Virgin Islands (1959) and Turks and Caicos Islands (1973).

Today, I’m heading to Ecuador. I read a report that the trouble in the U.S. has caused prices to go up all over the country. I'll find out and let you know in the coming days.

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