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 The Brancatelli File

joe RIDING THE ASIAN
CURRENCY WAVE


BY JOE BRANCATELLI

October 28, 1997 -- Let me rummage around in my Big Box of Columnist Cliches and see if I have an appropriate bromide. Ah, here it is: Every currency cloud has a silver travel lining.

I refer, of course, to the spreading Asian currency crisis that wreaked havoc on Hong Kong's Hang Seng Index last week and then shook the stability of bourses around the world. Fortunes have been lost, hard-working, everyday people from Bangkok to Taipei have seen their dreams shattered and our mutual funds have taken a hideous hit. But here's the good news: The cost of travel to Asia has plummeted.

Unless you live in Denver, where that new, $5 billion "weatherproof" airport is snowed in again, pack a bag and take care of your business travel to Asia soon. In a few months, the travel industry will have adjusted and the bargains will be gone. But, act quickly, and you can ride the waves of this currency crisis and save big time on Asian travel.

In case you weren't paying attention, this crisis started quietly, on July 2, when the Thai government devalued the baht. Then, a generation after it proved to be a disastrous political doctrine, the Domino Theory came true. One by one, with unprecedented rapidity, Southeast Asia's currencies toppled over on each other.

The result has been a dramatic upswing in the buying power of the U.S. dollar. Check out the chart below to see how sharply the currencies have shifted in only 90 days.

How do you profit from this turmoil? Generally speaking, buy as much of your travel as you can in these devalued Asian currencies. Specifically speaking, try some of these tactics:

BUY ONE-WAY AIRLINE TICKETS
The mechanism that the world's airlines use to smooth out currency wrinkles has been overwhelmed by the speed of this financial realignment. So airline tickets purchased in local Asian currencies currently cost hundreds, sometimes thousands, less than those purchased in the United States.

Consider the Los Angeles-Bangkok route. One-way fares purchased in the United States cost $1,169 in business class and $2,452 in first class. In Thailand, one-way fares cost 32,110 baht in business and 54,885 baht in first. Given today's currency exchange rates, that translates to just $849 and $1,452, respectively.

So rather than following the normal routine of buying a roundtrip ticket before departure, buy a one-way ticket to Bangkok in the United States, then buy your return ticket to Los Angeles in Thailand using baht. That'll save you $320 in business class and a cool $1,000 in first.

You'll reap similar savings on routes to Malaysia. Tickets from Los Angeles to Kuala Lumpur cost $1,500 in business class and $2,800 in first. In Kuala Lumpur, however, tickets to Los Angeles cost only $1,094 (3,644 ringgit) in business and $1,849 (6,157 ringgit) in first.

Still not convinced? Check out the Taiwan market. On mid-week flights, tickets to Taipei from San Francisco cost $1,060 in business and $2,467 in first. In Taipei, however, midweek flights to San Francisco cost just $795 (23,838 Taiwanese dollars) and $1,857 (55,724 Taiwanese dollars).

Now the smarty pants among you are saying, "Why stop there? Why not buy both ends of an Asian itinerary in the local currency and double the savings?" That certainly can be done, but discuss this option with your travel agent. It's tricky, it exists in a legal gray area and the risks might outweigh the benefits.

BUY HOTEL ROOMS IN LOCAL CURRENCY
To take full advantage of the currency shifts, make sure you're getting room-rate quotes in the local currency.

Two examples: The Shangri-La hotel in Kuala Lumpur has Internet rates starting at 430 ringgit. That was about $170 a night on June 27, but translates to just $129 at current exchange rates. In Singapore, the Oriental's Executive Package is posted on the Internet at 238 Singapore Dollars. That was about $167 in June, but just $151 now.

But beware: Stung by the currency shifts, many major chains have begun quoting room rates in US dollars. Naturally, those US rates have been adjusted for the currency changes. So insist on a quote in the local currency. If you have to, call the hotel directly for a local-currency quote. Or ask your company's local office--or even your local client--to make local-currency reservations for you.

BUY THERE, PAY CASH
Lastly, purchase as much as you can in the local currency. Many travelers prepay in U.S. dollars for meal vouchers, limo transfers, car rentals and other expenses. That's a terrible strategy when local currencies are declining in value against the dollar.

For as long as Asia's currencies remain in turmoil, buy nothing here. Do it all over there. And, wherever feasible, pay in cash rather than by credit card. If a local currency suddenly begins to trend up against the U.S. dollar, you'll pay the higher rate if you charge your purchases.

Now before you go jetting off to Asia, one more tip: Currency experts tell me that what is now being called the Asian Contagion may be headed to Latin America in the next few weeks. Insiders are predicting precipitous declines in many Latin currencies. So consider deferring your travel to Latin America to see if you can profit from the currency wave South of the Border, too.

Country

The U.S. Dollar Buys

Increase in
Buying Power

June 27

October 24

Thailand

24 baht

38 baht

58 percent

Indonesia

2,430 rupiah

3,584 rupiah

47 percent

Malaysia

2.52 ringgit

3.33 ringgit

32 percent

Philippines

26.3 pesos

34.3 pesos

30 percent

Singapore

1.42 dollars

1.57 dollars

11 percent

Taiwan

27.8 dollars

30.0 dollars

8 percent

Source: Pacific Exchange Rate Service (http://pacific.commerce.ubc.ca)



This column originally appeared at TheTrip.com.

Copyright 1993-2005 by Joe Brancatelli. All rights reserved.