'Marketplace' Report: Making the Most of the Dollar

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Steve Tripoli offers tips regarding how to deal with the diving dollar. Buying goods from countries whose currency is pegged to the dollar, or changing your investment mix could be good steps to take.

MADELEINE BRAND, host:

From NPR News, this is DAY TO DAY.

The once mighty American dollar is far from mighty these days, and that means a lot of challenges and a few opportunities for American consumers, businesses and investors.

Steve Tripoli from MARKETPLACE is here.

Steve, just how low can it go?

STEVE TRIPOLI: Well, Madeleine, do you mean in pure exchange rates or metaphorically? You know, in the blow to pride department we're seeing stories of the dollar becoming the currency of choice for speculators. These are people who borrow a weak currency, ours, and buy another currency they expect to go up against the dollar.

So you know, no respect, as Rodney Dangerfield used to say. But that's where the dollar is at these days. It's already quite low compared to other currencies. And how low can it go, you ask? No one ever really knows where a currency is heading, but many experts see the dollar continuing down for at least the coming half year or so.

BRAND: Well, how come? What are the experts saying about why the dollar is so weak now?

TRIPOLI: Well, this is all about a shock on top of a bunch of things we've been warned about for a while. The big culprit these days is the unknown extent of the subprime lending crisis, that story we keep talking about, and the credit crunch that it's spawned. No one's sure where the bottom is from all that damage-wise, so no one is sure where the bottom of its impact on economic growth is going to be, and that spills over to a U.S. consumer, who's already loaded down with debt.

And on top of all that are problems this country has struggled with but not resolved for years, like trade deficits and budget deficits and health care and pensions. So there's a lot of uncertainty about how the U.S. and people like you and me are going to hold up financially, Madeleine.

BRAND: Well, how are you and me going to hold up financially, Steve? I mean I know we can't buy as much as we used to, so what should we do?

TRIPOLI: Well, you know, that weak dollar makes exports - imports into this country more expensive, and we buy a lot of them, and some of them, like oil, we can't just stop buying. Maybe we can work on using less oil or buying from countries like China, whose currencies are pegged to the dollar, which means the prices of their goods rise less, but that's just really nibbling around the edges in the short term.

There is another way to look at this, however, Madeleine, and that's as an investor, which more and more Americans are, and here's a place where you can do something more, although you should do it carefully. A weak dollar makes a good case for what experts tell us we should all be doing anyway, which is diversifying our investments to more foreign markets.

BRAND: Uh-huh. And also companies who export, they're doing pretty well, right?

TRIPOLI: Right, if they do a lot of business overseas, you know, that helps too. One currency expert outside our border who's been noticing this is Matthew Strauss at RBC Capital Markets in Toronto, who says there's a bit of a silver lining to this weak dollar thing.

Mr. MATTHEW STRAUSS (RBC Capital Markets): If we look at it from a trade perspective, we've already seen exporters performing much better because of improved competitiveness. So from a trade side, it should benefit the economy and prevent some job losses on that side at least.

BRAND: And Steve, another silver lining. I read over the weekend that a lot of the customers in stores over the weekend, they were foreigners.

TRIPOLI: That's right. Shopping sprees from abroad and tourism. Some parts of our economy gained for sure from this dollar weakness, Madeleine, as you know. So that may be a blessing in disguise there too - but one we had to pay a price to get to.

BRAND: Thank you, Steve.

That is Steve Tripoli of Public Radio's daily business show MARKETPLACE, produced by American Public Media.

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