How would you like your analysis of the unprecedented worldwide decline of the U.S. dollar?
Political? President Bush told the Economic Club of New York last month that he “believe[s] in a strong dollar.” But since his 2001 inauguration, the greenback buys 14 percent fewer Japanese yen; 27 percent fewer British pounds; and 45 percent fewer Australian dollars. The dollar buys 43 percent fewer euros than when it launched as a street currency in 2002. So travelers who take Bush’s “strong dollar” overseas have less international buying power than at any time in decades.
Humiliating? The greenback is falling so fast that the government of India, which used to accept dollars as payment for admission to the Taj Mahal, now demands that visitors pay in rupees.
Surrealistic? With the dollar worth just 50 cents against the British pound, everything in London costs twice what it does in New York. A room at the Hilton New York, in Rockefeller Center, costs $259 next Tuesday night, but you’ll pay $518 (£259) at the Waldorf Hilton in London’s West End.
Anecdotal? I had a free Saturday in Rome not too long ago, so I grabbed a copy of the International Herald Tribune ($3.50 for the 16-page weekend edition) and sat at a coffee bar with an espresso ($8 for a two-ounce cup). Then I wandered into a kitchen-goods store. A panini press I’d purchased for $130 back home was selling for 189 euros—or $283.50.
Ironic? The traditionally enfeebled Canadian dollar was worth 62 cents against the U.S. dollar in early 2002. Now the loonie is at parity with the greenback. There’s the psychological blow of the world believing that a U.S. dollar is no more powerful than a Canadian dollar and a financial blow for businesses that purchase north of the border.
When the dollar slumped in years past, business travelers shrugged and moved on. Currency fluctuation is like air: It’s there, and there’s not much you can do about it. Usually, this year’s run on the dollar in England becomes next year’s run on the yen in Japan. Over the course of a couple of years, it all works out, give or take a shekel or a forint.
This time, though, the dollar has fallen so far, so fast, and so universally that business travelers are getting dinged—in both the wallet and the psyche.
“I cancelled a business trip to Stockholm in January. It was just too damned expensive,” says Susan Tomlinson, a frequent-flying financial-services executive whom I’ve known to be physically and financially fearless over the years. “At six krona to the dollar, everything is out of sight. So I did my business by email.”
A dollar was buying more than nine krona a few years ago. Even for business travelers, 50 percent currency shifts don’t go unnoticed.
Leisure travelers can stay home and rediscover America or travel to places where the dollar is still strong, such as Argentina and Turkey. But business travelers are screwed. Unless we’re prepared—and able—to scrap business trips, our options for hedging against high prices overseas are limited and not all that palatable.
We can, of course, trade down overseas, by staying in less-expensive hotels, eating at less-pricey restaurants, and switching from taxis and car services to mass transit. But trading down is risky.
Europe and Asia don’t have America’s diversity of shiny, new, low-cost lodging options. If you’re staying at a five-star grande dame property, you can trade down to a four-star Hilton or Marriott. But below the Hilton/Marriott level, there’s very little lodging stock suitable for business travel. Two- and three-star hotels overseas usually lack basics like in-room workspace, high-speed internet access, and 24-hour service.
The only other practical advice I can offer (as well as eliminating the purchase of a $3.50 newspaper) is to cut back by keeping your currency-transaction fees as low as possible. Credit-card issuers now sock you with a 2 to 5 percent “international service assessment” whenever you make a charge in a foreign currency. If you travel overseas frequently, get yourself a credit card issued by Capital One. Alone among major issuers, it offers fee-free transactions.
Large banks have also begun piling on the surcharges for those using ATM cards overseas. Before you travel, check your bank’s current ATM policy and demand that it waive any overseas fees. If it won’t, open a Capital One money-market account. It not only offers higher-than-normal interest rates, Capital One eschews fees on ATM withdrawals.
One other tip: Never sit down at an Italian coffee bar. You pay for the service—and the table. Standing at the bar generally yields espresso at half the sit-down price. In these weak-dollar times, Americans simply can’t afford to sit.
The fine print …
A follow-up to February’s column on airport clubs: Delta is closing nine Crown Rooms by the end of April, and United Airlines has already shuttered its Red Carpet Club in Sydney. But there is good news: United now offers free Wi-Fi access in 27 Red Carpet Clubs and in five of its international first-class lounges.