Gulf Crisis Stings Dollar, Empties Tourist Pocketbooks With AM-Gulf Rdp, Bjt
PARIS (AP) _ Americans traveling in Europe this summer find the purchasing power of the already weak U.S. dollar sapped even further by the crisis in the Persian Gulf.
From London to Athens, the dollar buys far less than it did a year ago. Once-cheap destinations, bargain basements no longer, are raising eyebrows and flattening pocketbooks.
″We sat in a sidewalk cafe yesterday and were shocked a small beer cost $8,″ said Christopher Kirk, 42, of Seattle, who was visiting Paris. ″Everybody’s been asking us for $5 for a coffee and roll for breakfast.″
Poring over brochures at the Champs-Elysees tourist office, Kirk and traveling companion Janet Stanford ruled out a shopping spree for designer wear. Any fashions they take home will come from mid-priced department stores.
They number among tens of thousands of Americans visiting Europe whose greenbacks have lost about 20 percent in value to benchmark European currencies since this time last year.
The gulf situation has pushed the U.S. currency even lower.
A dollar bought 5.38 francs Aug. 1, the day before Iraq invaded Kuwait. On Friday, it fetched 5.21 francs.
Things are tough even in Greece, a haven for budget holidaymakers.
Mary Mandis of Fort Lee, N.J., couldn’t understand ″why my dollars are buying less drachmas at the bank when I thought Greece was so cheap.″
A Paris-based financial analyst said the dollar is weak for many reasons: ″Slowdown in the U.S. economy, lower interest rates. More people interested in Euro currencies.″
The gulf situation added to the reasons for the slide. Higher oil prices resulting from Iraq’s takeover of Kuwait renewed the threat of a U.S. recession, pushing the dollar down, the analyst said.
The Deutschmark grew mighty in the last year as investors saw West Germany as the economic powerhouse of a bigger Europe, the analyst said, speaking on condition of anonymity.
The dollar is at a historic low against the mark, dropping from about 1.75 marks to 1.54 in just two months. In Britain, the pound is nearing the benchmark $2 level. In Italy, the dollar has plunged to its lowest level against the lire since 1981.
Just a few years ago, footsore Yanks saw Rome as crowded and smoggy but a bargain for a well-cut suit or big meal.
Today only the crowds and smog remain.
″We learned the first night,″ said Missy Prowell of Huntington Beach, Calif., traveling with her husband, Court.
″We had a very nice dinner in a restaurant, but we had to pay 190,000 Italian lire (about $190),″ Mrs. Prowell said. ″That was outrageous. Now we share dishes and split desserts.″
Americans are also staying out of the clothing shops.
″I’d love to buy shoes,″ sighed Lydia Lavin, from Olean, N.Y. ″But I content myself with looking at them.″
The potential oil shortage has boosted gasoline prices in Europe as well as the United States. Touring English country lanes costs 5.8 cents more per liter of gasoline more than it did a month ago.
″We rented a car, and I thought gas prices were going up at home,″ said Richard Ralston. ″I filled up a small Ford for $46.″
Expatriate workers feel the pinch of the currency exchange rate, and so do those who depend on their salaries paid in dollars.
Like Harry Spittler, who hawks cuckoo clocks and nutcrackers to an almost exclusively American clientele of GIs and tourists from his gift shop in Kaiserslauten, West Germany.
″We are very much affected by this. Our business has gone down almost 20 percent in the past month,″ Spittler said.
″Many Germans haven’t realized the benefits they accrue from the GIs over here. But now they’re starting to see.″
It’s hard to tell if fewer Americans are visiting Europe. Most tourist ministries don’t analyze statistics until September.
But Hartmut Emmich of the Reisedienst der Wirtschaft travel office in Frankfurt feels that the low dollar hasn’t changed travel plans for many Americans.
″They booked these trips months ago. They have a set price when they are booked and there haven’t been many cancellations,″ Emmich said. ″But it will certainly affect bookings for next year.″