The spread of coronavirus across the world has caused some panic and overreaction, but also some very real issues not just economically but also in terms of travel and the supply of goods and services.
Has coronavirus affected travel money?
There is still good wholesale supplies but some exchange rates have been affected by the slump in stock market values and the fall in the pound.
The US dollar, which is the worlds largest trading currency, recently lost value and the Federal Reserve stepped in with an emergency interest rate cut to try and halt the decline. However, the retail exchange rates – the rates you and I can get for our holidays – has actually improved over the last 10 days. On March 2nd 2020 we saw an average rate of around 1.267 and on 10th March had improved to 1.294.
The all important euro has seen a fall over the last 2 weeks. The currency started the year on a high but has dropped back and saw a steep fall from February 26th. In January 2020 you would have got 1.19 but today the average is 1.13 and the lowest online rate we can see is Barclays at 1.09.
We asked independent foreign exchange company Covent Garden FX a couple of questions to get a view on the situation from the supplier side:
Has the Coronavirus epidemic affected wholesale currency supplies?
They told us “Currency supplies have been fine with us, we can’t see that being really affected”.
Is it likely to if it carries on?
“Nobody at the wholesalers have suggested this might be a problem”.
Have you seen any different trends with buying or selling because of it?
“We have seen a decrease in orders due to the worry of the coronavirus, customers are definitely limiting their travel plans and we have seen a notable decrease and cancellation of orders for Chinese Yuan”
Have you noticed any currencies in particular affected?
“Dollar and Euro orders have decreased but not substantially, though orders for Easter Holidays have slowed down. Customers seem to be still awaiting further news on whether travel to areas like Spain and I think if Easter orders pick up it will be at the last minute when people have a clearer picture of what travel may be like to those areas”
Our own data at CompareHolidayMoney suggests that people are a little more cautious but there is no real difference in trends to earlier in the year or what we might expect from this time of year. There is a natural reluctance of people to buy too much ahead of time because the virus is still continuing to spread and this may affect travel in the medium term.
As always, it is impossible to predict what the exchange rates might be in the future, either tomorrow or next month and the best advice is to keep an eye on what’s happening and if you are travelling to any country that may impose travel restrictions then maybe hold off before you buy your currency. Our monthly newsletter always includes current exchange rates and information on currency movements.
If your trip is cancelled, then any currency you’ve bought probably won’t be covered by insurance and you won’t able to sell back at the same rate. It might be best to pop it somewhere safe, and look forward to your trip when things return to normal.
Package holiday cancellations are normally covered by ABTA if your travel company is a member but if you have booked independently you may be covered by travel insurance depending on your policy. It may be time to examine the small print, Good luck!
Thanks to Sam Newbury, currency expert at Covent Garden FX for help with information.