The Sinking Dollar

　　Also Has an Upside

　　July 30, 2007 issue - Imagine waking up and finding the value of your assets has been halved. With the dollar slumping to a 26-year low against the pound, already-expensive London has become jolly unaffordable. A macchiato at Starbucks, just as unavoidable in England as it is in the United States, runs about $8.

　　The once almighty dollar isn't doing a Titanic against just the pound sterling. Currency analyst Ashraf Laidi of CMC Markets in New York notes that the greenback is sitting at a record low against the euro and at a 30-year low against the Canadian dollar.

　　The weak dollar is a source of humiliation. It's also a potential economic problem. And yet there are substantial sectors of the vast U.S. economy—from giant companies like Coca-Cola to mom-and-pop restaurant operators in Miami—for which the weak dollar is most excellent news.

　　The rusted industrial regions of upstate New York that border Canada have little going for them economically. For the past few decades, they've lost industries and population to places with more-salubrious climates. But the strong Canadian dollar is encouraging more cross-border shopping. Chuck Skelling, manager at Towne BMW in the Buffalo suburb of Williamsville, receives a few calls per day from Torontonians inquiring about new Bimmers. Because Canadian car prices are based on old exchange rates, the same BMW 335 convertible that retails for $48,000 in the United States sells for the equivalent of $63,000 in Toronto.

　　The strong euro is making even the most expensive U.S. real-estate markets look reasonable. Residents of Ireland, until recently one of the weakest economies in the developed world, are helping keep New York's condo market aloft. When he built the Centria across the street from Rockefeller Center, Jules Demchick, chairman of New York-based JD Carlisle Development Corp., focused his sales efforts in Dublin. "About 90 percent of the sales have been to Irish people," he said. "We didn't even market it in the U.S."

　　Many Europeans may view the U.S. as an arrogant hyperpower that has become hostile to foreigners. But nothing makes people think more warmly of the U.S. than a weak dollar. Through April, the total number of visitors from abroad was up 6.8 percent from last year, according to the Commerce Department. Should the trend continue, the number of tourists this year will finally top the 2000 peak.