By Tim Leffel Travel columnist
updated 10/8/2008 3:17:32 PM ET 2008-10-08T19:17:32

Don’t look now, but your travel dollar is actually worth something again. The global financial mess has become a contagious nightmare, but there’s one piece of unexpected happy news: the greenback has been rising in a lot of countries where it had hit rock bottom.

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Blame it on “comparative pain.” As bad as things seem in the U.S., they’re even worse in other countries with higher inflation, higher unemployment, and a weaker central bank. Plus as the credit crisis has spread far and wide, countries that saw the biggest bubbles in the financial system are now seeing the fastest plunges back to Earth.

A doubling of value near the Northern Lights
For the most extreme case, look to Iceland. In January of this year one U.S. dollar would get you around 62 kroner. When I visited at the end of last month, I got around 100 kroner to the dollar. This week it was already up to 144 to the dollar.

That’s probably not the end of it. As the free-lending banks on the small island nation crash and burn, Iceland is facing a “national bankruptcy” according to some reports. As unbelievable as this would have sounded a year ago, for the moment it is cheaper to vacation in Iceland than it is to do so in New York City. Everything is half the price it was just seven months ago.

Less pain in Europe

The changes are not yet so dramatic in the rest of Europe, but the dollar is gaining there as well. It took around $1.60 to buy one euro during the peak July travel period this year. Now the dollar is trading around $1.35. This only brings us back to the level of where we were at this time last year, but any good news is welcome for Europe-bound travelers.

The British banking system has been having problems for quite a while and the pound sterling stayed around the level of one pound per two dollars even as the euro was rising. Now the pound is trading at $1.75, which at least brings the cost of a pint of beer or a Tube ride under 8 bucks.

The dollar is also up for the year in most other European countries that don’t use the euro, including double-digit gains in Norway, Romania, and Turkey.

Relief in popular tourist destinations
For a while the U.S. dollar was falling in many tourist destinations that on the surface have no direct connection to the euro. The trend has now reversed in many of these locations, in some cases quite dramatically.

The dollar is up 24 percent in South Africa, 14 percent in both Brazil and Chile, 18 percent in India, 14 percent in Thailand, 13 percent in Australia, and 15 percent in New Zealand. Canada is starting to look affordable again too: we’re well above the 1-to-1 parity mark and the U.S. currency is regaining lost ground.

Video: Cutting the travel budget I won’t hold my breath waiting for the U.S. airlines to drop the onerous fees that were spurred by $150 a barrel oil, but at least lots of attractive places are suddenly more reasonable once you arrive. If you’ve still got a job and you’re not up to your eyeballs in debt, this would be a prime time to go abroad. Just keep your eye on the exchange rates because next month it could all change again.

For the near future though, avoid Japan. That country has already lived through a prolonged banking crisis and recovery, so the yen is holding up well this time around.

Tim Leffel is author of the books "Make Your Travel Dollars Worth a Fortune" and "The World's Cheapest Destinations". He also edits the award-winning narrative Web 'zine Perceptive Travel.

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