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Letter to the editor

The dwindling dollar

By BECKY BOWERS, Times Staff Writer
Published November 24, 2007

Heard about the weak dollar? The ol' George Washington has been stacking up shorter lately. It hit a new low Friday against the euro, now worth nearly a buck and a half. But the shrinking started in 2002. Since then, the dollar's value has dropped nearly 25 percent against a group of major currencies. While the U.S. position is that a strong dollar is good, a weak one isn't all bad. Here's who wins and loses.

THE WINNERS

U.S. exporters
After five straight years of record-high trade deficits, American manufacturers and farmers find that cheaper prices on their goods abroad are creating a surge in export sales.
Tourists to America
Visitors from Canada and Europe made up nearly a quarter of Pinellas tourists in 2006. They'll likely find U.S. destinations even more attractive as their money goes further.
U.S. companies overseas
American companies with substantial foreign operations could reap big benefits. Any profits earned in local currency will get a nice boost into dollars on the way home.
Investors in foreign stocks
The Morgan Stanley EAFE Index , which stands for Europe, Australia, Far East, has more than doubled the performance of U.S. blue-chip stocks in the S&P 500 Index over the past five years.
Foreign buyers of U.S. real estate
Exchange rates give foreigners even more leverage to grab a piece of the sagging U.S. home market. And they more often pay cash than Americans. In Florida, about 7 percent of buyers last year were foreign.

THE LOSERS

European exporters
Ask France's Airbus, rival of U.S. jetmaker Boeing, how it likes to find its products pricier. It plans to cut costs by 1-billion euros by 2011, as other exporters shed jobs and plants.
American tourists abroad
You might think twice about Toronto, Paris or London, where you'll spend more in hotels and shops. This year the dollar is down 16 percent against Canada's, 10 percent against the euro and 4 percent against the pound.
U.S. consumers
You might see an increase in the price of your favorite European car or olive oil, but also in the cost of your car's fuel. Oil is sold in dollars, and producers are demanding higher prices to compensate for the dollar's decline.
Oil-producing countries
OPEC nations' currencies are tied to the dollars' fate. Some of them may follow Kuwait's summer move, and shift to a basket of currencies. The nightmare scenario is such shifts look like a vote of no confidence in the dollar, which could threaten sell-offs and even recession. But experts point out that the Saudis, for example, have the value of their dollar reserves to consider. For now, they insist they'll peg their currency, the riyal, to the greenback.

Staff writers Helen Huntley and James Thorner contributed to this report, which used information from the Associated Press, Los Angeles Times and BusinessWeek.

Becky Bowers can be reached at bbowers@sptimes.com or 727 893-8859.

[Last modified November 23, 2007, 22:40:29]