The US dollar, having been on a downward spiral against the euro for months, has rallied slightly, but currency experts say it is probably just temporary. The financial markets have come to believe that the US is happy with the situation as it helps redress Washington’s huge foreign trade deficit.
Kathleen Stephansen, an analyst with Credit Suisse First Boston, said Washington welcomes the dollar’s decline: “As long as it is in an orderly way, what it does is it helps the economy via exports and via higher corporate profits repatriated from overseas and that helps jobs creation, so from that standpoint it is a positive.” The dollar’s long-term trend is down and US retailers are already reaping the benefits. European visitors are finding their holiday shopping is much cheaper whether they are spending euros or pounds. British tourist Theresa Murray in New York said: “To be perfectly honest, we’d probably buy the same things here at 50% of the price it would be at home. We save a lot of money on electrical goods, clothing, anything of that nature.” As a result Britons took 20% more trips to North America in the late summer early autumn than they did in the same period last year.