TAKESHI KASAI, a student from suburban Tokyo walks down Fifth Avenue loaded with shopping bags from Burberrys, the Gap, and Levi Strauss. Told the Japanese yen is stronger, he smiles.
Yes, he agrees, it could make New York shopping even cheaper. But, he quickly adds, ``It's not too good for Japan.''
The currency turmoil - with a super strong yen and German mark -
may mean better buys for Mr. Kesai.
It could mean higher prices on some imported goods from Japan or Germany for American shoppers. But in the case of goods from Canada and Mexico, which have also seen their currencies drop in value, buyers in the United States may find bargains.
Federal Reserve Chairman Alan Greenspan told Congress yesterday that the dollar's decline against some currencies was ``unwelcome and troublesome.''
It has the potential, he said, to increase inflationary pressure on the US economy. In his prepared remarks, Mr. Greenspan made no mention of the possibility that the Fed was close to the end of its string of hikes in short-term interest rates. Some observers blamed earlier hints by Greenspan of a shift to easier credit down the road for the bubbling in foreign exchange markets.
The day before, US Treasury Secretary Robert Rubin repeated that a strong dollar was in the US national interest.
The weak dollar will certainly make trips more expensive for tourists and business people visiting German or Japan. For example, a room at the Ramada Garni Nordwestzen in Frankfurt costs 156 marks ($116.79) per night. Last fall, the same room would have cost $97.50 because the dollar was worth more. The same is true in Tokyo where a 40,000 yen hotel room at the Westin would have cost $392.16 at year-end, but costs $454.54 today.
On US shores, the effects of the falling dollar are harder to quantify. Oil imports, for example, are mostly priced in US dollars. However, Saudi Arabia has reportedly put a higher dollar price on some of its oil exports to offset the decline in the value of the dollar. Silk ties from Italy are unlikely to rise in price either since the lira has been falling in value as well. But, the prices of such cars as Hondas and Toyotas may rise slightly since 30 to 40 percent of their content originates in Japan.