Last week I got a note from the operator of a small tourist lodge in Tierra del Fuego asking me what I thought the impact of the current global economic crisis might be on this summer’s season. On the surface, of course, it makes sense that people whose mutual funds have lost a third of their value might be reluctant to spend money traveling great distances but, at the same time, there’s a certain logic in going against the grain. I’d never suggest that people should throw away their retirement funds on a two weeks’ vacation but, just as investor Warren Buffett recently said, he’s moving his money into U.S. stocks because of the financial meltdown, international travelers may find they’ll get more for their money in traveling to the Southern Cone countries.
That’s partly because, against all odds, the U.S. dollar is actually strengthening against the currencies of Argentina, Chile, and Uruguay, and there are other favorable signals as well. When I was last in Chile in April, the peso was at roughly 430 per dollar, and the 2000-peso banknote illustrated above was worth about US$4.65; on Friday, with the peso at 617 per dollar, that same banknote was only worth US$3.24. As in the stock market, there have been some fluctuations, but the bottom line is that the dollar is worth 30 percent more than in April.
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