The Aussie dollar has suffered amid global economic uncertainty, sparked by Donald Trump’s trade policies. Flights, accommodation, meals, and insurance – many things can become more expensive when your dollar doesn’t go as far. Could Trump’s tariffs disrupt your travel plans?
The Aussie dollar’s weakest point in about five years
The Aussie dollar has fallen to 59.15 US cents, its weakest point in about five years. It has since recovered slightly, buying about 62 US cents. The Aussie dollar is also weaker against the Euro, buying about 55 euro cents – down from 58 euro cents last month. Despite the dip, Dr Luke Hartigan, lecturer at the University of Sydney and a former Reserve Bank economist, warns against assuming price hikes across the board just yet. “Thinking back to when the dollar went below 50 [US] cents back in the 2000s, it didn’t lead to immediate, massive price rises. Many businesses absorbed the costs or hedged against them,” he said.
Currency hedging: a way to mitigate costs
Companies that rely on overseas imports often protect themselves through currency hedging, locking in exchange rates in advance. This means some travel-related costs may not spike immediately, but if the dollar stays low for months, you could feel the pinch more at the petrol pump or when booking international flights. “Fuel and air travel – those will be reflected quite soon, I imagine,” Hartigan said. “What is likely to be reflected immediately is consumers deciding to travel locally. So you may end up going to Queensland or just to Cairns instead of going overseas, with the exception of New Zealand. That’s the one country our dollar always never falls against.”
A shift in consumer behaviour
A study released by the Tourism and Transport Forum (TTF) that surveyed Australians about their travel plans from 1 December 2024 to 28 February 2025 showed that despite the rising cost of living continuing to strain Australians’ wallets, a significant portion of the nation still planned to prioritise travel. NSW and Queensland emerged as the most popular destinations for those travelling domestically, while Aussies headed overseas were most likely to visit New Zealand, Japan or Europe. TTF CEO Margy Osmond said despite the age-old advice to book in early, Australians have indicated their openness for a last-minute travel plan.
- A third of Australians would even wait until a few days out from departure to get organised.
- Australians are showing a stronger preference for international holiday destinations over domestic ones.
The impact of global economic uncertainty
Professor Sara Dolnicar from The University of Queensland who specialises in travel and tourism said travel is a “very price elastic good”. “Given the current cost of living crisis and now the low Australian dollar, when it comes to tourism, it reacts strongly to price changes or income changes,” she said. Dolnicar said consumer behaviour has shifted post-pandemic, with Australians now showing a stronger preference for international holiday destinations over domestic ones. “The pandemic taught us that we actually can have a nice holiday close to home. I was hoping that realisation would linger, especially for sustainability purposes. But in Australia, that hasn’t been particularly the case,” she said. Delayed, but not cancelled
Australians are delaying their travel plans until the economy improves. But Dolnicar said this is not about giving up on the dream. “It’s about delaying it for when it becomes more affordable. Australians still have this very strong desire to travel internationally. We have destinations like Europe and the United States that are somehow idealised in what it means to us to have a specific kind of holiday,” she said.
Travel tips for a weak dollar economy
If you’re still keen to travel internationally, a few savvy moves can help ease the blow:
- Book early.
