Another day, a weaker dollar

U.S. one dollar bill

TEXT OF INTERVIEW

Lisa Napoli: Two dollars and a nickel. That's how much it'll cost you to buy a British pound. It's the highest the pound's been in 26 years. The euro keeps climbing too. Today it's at $1.38. Now, you know this is crummy news if you're planning to head to Europe this summer, but I asked our London Bureau Chief Stephen Beard the other effects.

Stephen Beard: What it will mean of course is that European exports to the U.S. will become a lot more expensive. That'll be bad for European exports. It'll b e bad for countries like germany, which is one of the world's major exporters, which has essentially kept its economy afloat by exporting to the U.S. If we take, though, an individual company like Airbus — it's in deep, deep trouble for all sorts of reasons, but one of the big problems it has is that it sells its aircraft priced in U.S. dollars, but most of its costs are in euros. So as the dollar declines, its profits are going to cover less and less of its euro costs.

Napoli: So Stephen, it's not just the tourists who are hit by this, the tourism industry that's hit by this, which of course is enormous, what you're saying is that it has deeper effects. Does anybody benefit from the dollar falling?

Beard: The U.S. will certainly benefit, and it's what the U.S. needs to deal with this huge trade deficit because obviously a weaker dollar will make it more difficult for Americans to import those increasingly expensive goods from abroad while making American goods much more attractive in overseas markets.

Napoli: That's our Stephen Beard in London.

About the author

Stephen Beard is the European bureau chief and provides daily coverage of Europe’s business and economic developments for the entire Marketplace portfolio.

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