Halfway through 2024, it’s a good time to take stock of the dollar’s buying power overseas. And this year, there’s a mixed bag of winners and losers.
The following countries offer the best “currency bargains” for 2024 so far, including a few markets that saw the dollar lose buying power this year but are still a good buy by historic standards.
(This report analyzes the dollar’s performance in 2023… but to assure it’s current, I’ve extended the window through March 2024.)
Chile offers an amazing first-world lifestyle, with modern, well-kept infrastructure and thousands of miles of dramatic coastline… as well as pristine mountains and valleys and four seasons.
The honest culture, high standard of living, and available sophisticated city lifestyle are hard to match anywhere.
The dollar’s strength has increased by 6.8% since the start of 2023, with a total increase in buying power of 4.9% over the past five years.
My favorite market in Chile is in Santiago, specifically the Providencia sector. It’s the best for city living, and a great place to own a medium-term rental.
I’m also a fan of Viña del Mar, Chile’s primary beach resort… although the coast has dozens of attractive seaside options. For an energetic university vibe, check out Concepción.
Brazil is exciting, romantic, and diverse. I refer to it as “one step beyond Latin America,” as its culture and language are just a bit more unfamiliar and exotic to North Americans.
The dollar declined by -5.7% since the start of 2023 but still enjoys a total increase of 28% over the past five years.
It’s an exciting time to invest in Brazil, as you still stand to gain twofold… from the recovery of the economy as well as the continued rebound of the currency.
Colombia boasted some of the region’s best exchange rates and most-dramatic property bargains (it dropped markedly this year).
What’s more, the country has a lot to offer the expat, especially in the city of Medellín, which offers the best city living I’ve found in the Americas.
The dollar declined by -19.2% since the start of 2023 but still enjoys a total increase of 23.1% over the past five years.
These drawbacks aside, I believe that Medellín is the best value in Latin America for a sophisticated, elegant city lifestyle… especially at today’s still-favorable exchange rate.
The euro is unchanged against the dollar since the start of 2023, at about $1.07 per euro, still enjoying a boost in buying power.
But the dollar still has 4.5% more buying power than it did five years ago, so by historic standards, Europe is a relatively good deal. In fact, the euro traded at $1.34 at the start of 2014… by that standard, today’s Europe is a super deal.
Europe is the top-shelf option in the expat world. And all things considered, it can be much less expensive than you think.
If dining out with good wines is a notable part of your budget, you’ll be amazed at the low prices in, say, Spain when compared to the United States. Prices in northern Spain are more on par with Mexico.
Mexico’s popularity has not diminished… but the buying power of Americans and Canadians sure has.
The dollar declined by -13.8% since the start of 2023 and has lost a total of -16.5% over the past five years.
The only positive thing I can say about exchange rates in Mexico is that the dollar-holder still has 68% more buying power than in 2008… to take a really long view.
Lately, the dollar has been disappointing, possibly owing to Mexico’s super-high interest rates on deposits… it’s no wonder dollars are flooding into the country and buying up pesos in these high-interest accounts.
But while not as cheap as last year, Mexico is still the #1 overseas destination for Americans, with more than a million American expats calling it home… myself included.
Weak Dollars Can Work In Your Favor
A weak dollar is not always bad. Thousands of readers already own properties in countries where the dollar is weakening… in places like Colombia, Brazil, and Mexico. For these folks, their property is now worth more in dollar terms.
In fact, I’ve long been citing the potential for currency gains in Brazil and Colombia, along with their potential for capital gain. This year is a good example of these gains.
For a Mexican example of the weakening dollar’s effect, in January 2023, a property worth 5 million pesos cost $256,700. At today’s rate of exchange, that same property is worth $297,600… a gain of around $41k without accounting for any capital gain.
How To Manage Currencies
You and I can’t predict exchange rates, and I don’t encourage you to try to “time” the market when buying property. Even the experts do a poor job of predicting future currency movements.
But there are a few things you can and should do…
- Be aware of where the currency is compared to historic trends. You should not buy (or sell) in a foreign currency without at least being aware of this. The exchange rate may not determine whether you act… but it should at least be a factor in your decision.
- Open an account to hold your foreign currency. I do this with a local bank account in countries where I have (or had) a property. But I’ve also used foreign currency accounts in U.S. banks, as well as foreign money transfer services like Wise or Moneycorp.
- Move money when the time is right…not necessarily when you need it. Your rate is locked in when you buy the currency, not when you send it. Consider buying it before you need it if you see a historically good rate… or leaving it abroad in a holding account until the time is right for repatriation.
Sincerely,
Lee Harrison
Contributor, Global Property Advisor