The effects of a weakened dollar have shaken the nation's economy, causing tremors even in Utah. But while travelers and missionaries abroad bear the weight of the falling dollar, it's also a boon for some Utah exporters.
And the dollar's sharp decline over the last 21/2 years, falling more than 40 percent against the Japanese yen and the West German mark, has positive implications for the nation's trade imbalance, Utah economists said.The state's travel industry, although not seeing a decline in numbers of tours sold abroad, is seeing some changes in travel plans because of the devalued dollar, a local agency said.
Air fares bought on American carriers with dollars remain low, but daily expenses abroad have jumped 25 percent to 30 percent, said Gwen McKinley, manager of Murdock Travel's foreign independent travel office.
"Japan is more obvious because the dollar looks terrible against the yen, but it affects the whole Orient and Europe, too," McKinley said.
As of Monday the yen stood at 124.6 to the dollar, according to foreign exchange rates.
"We can get to Japan quite inexpensively, but the accommodations are astronomical," she said. Travelers are requesting accommodations in less expensive hotels to compensate for otherwise hefty travel expenses, she said.
The current trend in the fall of the dollar is quite the opposite of four years ago, when Americans were flocking to Europe and elsewhere, taking advantage of the strong value of the dollar in foreign markets, McKinley said.
Families of LDS missionaries traveling overseas are facing problems because of the dollar's fall.
Kirk Powell, 20, Taylorsville, will be returning to Salt Lake City after a two-year mission in Japan, his father, Robert, said. His stay has been marked by a steadily
dropping value in the dollar, not unnoticed by his family.
"You see the change (in exchange rates) and you make certain plans, and the value changes again," Powell said. The dollar Powell sends overseas to his son ultimately ends up being considerably less, he said.
"But you can work around it," Powell said. His family often sends his son American products, such as contact lens solution, that are expensive and hard to find in Japan.
On a larger scale, the devalued dollar has raised the cost of many overseas missions, not just missions to Japan, said Van MacCabe, finance director for The Church of Jesus Christ of Latter-day Saints.
"It's a concern to us because the average cost for missions has gone up a bit, although in some countries it's gone down," McCabe said.
"Worldwide, it (the devalued dollar) has resulted in average costs per mission going up a little, and in some missions it's gone up significantly," he said.
"We hope that things may have stabilized, but who knows what will happen in future months with the dollar and the yen," McCabe said.
Some Utah businesses, on the other hand, are enjoying the positive effects of the devalued dollar. Utah products, as well as other American items, made inexpensive by the weakened dollar, are selling like hot cakes in foreign markets.
One small-business woman in Salt Lake City has seen dramatic sales improvements as a result of the drop in the value of the dollar.
"There has definitely been an improvement in interest and orders (of her product), which is very nice because the export business used to be a considerable part of my business," said Marian O'Leary, president of Rock Tools, a small company that manufactures a mining implement in Salt Lake City.
Forty to 50 percent of Rock Tool business once went overseas, O'Leary said. The high dollar of the early '80s trimmed that figure to a less than 10 percent, but the dollar's recent fall has given O'Leary new confidence.
"I think it (foreign business) will get back up to 25 percent, which is really nice because I think it will grow beyond that," she said.
Utah trade officials welcome the drop in the dollar as a tool to increase overseas sales and combat the widening trade deficit between the United States and Japan and other countries.
"I would say that for individual companies, regardless of the cause of the devaluation of the dollar, it should open up better export opportunities," said Greg Gullett, a trade specialist for the Utah International Business Development Office.
New interest in Utah products and items from across the nation, the result of a weak dollar making state-side products inexpensive, may "increase exports and level out the trade imbalance," he said.
Salt Lake City's Key Bank trade economist Jeff Thredgold agreed, saying although the fluctuating dollar has sometimes "raised havoc" with the nation's economy, the overall affect of the devalued dollar may be a positive one for controlling the trade deficit.
"I think it's clear that the devaluation of the dollar has been very good for exporting companies and that devaluation, combined with U.S. corporation's attempts to streamline operations . . . suggests much more optimism for U.S. ability to compete worldwide," he said.
But before the trade deficit evaporates, some economists believe the Federal Reserve Board may step into bolster the value of the dollar by raising interest rates, often a precursor to periods of inflation.
"The Fed is walking a tight rope right now between wanting to see the economy do well but at the same time recognizing the low dollar has some inflationary costs along with it," Thredgold said.