US dollar’s image losing currency as emblem of extravagance, success
NEW YORK – WHEN people start talking about rappers and supermodels shunning the US dollar, you know there’s a problem.
As the greenback recently hit historic lows against other major currencies, rap mogul Jay-Z released a new video in which he flashed euros, not dollars. It was also widely reported recently that one of the world’s richest supermodels, Gisele Bundchen, opted to be paid in euros because of the dollar’s weak outlook.
Her spokesman denied that the model was spurning the dollar, saying Bundchen was paid in the currency of a job’s location.
Nevertheless, the euro bought an all-time record US$1.4752 earlier this month, and the British pound had also been trading at its highest levels against the dollar since the early 1980s.
The Canadian dollar, often called the ‘Loonie’, reached parity with the US dollar in September for the first time since 1976.
While investors, multinational businesses and travellers have been witnessing the dollar’s slide for years, pop culture is new territory.
Jay-Z’s Blue Magic video seems to have been an attempt to acknowledge the dollar’s decline in an ironic way and to paint the artist as an international superstar who is smarter than those accepting greenbacks.
‘It is probably a particularly good strategy as the ‘image of the dollar’ loses its ‘currency’ as an emblem of extravagance and success,’ Mr Steven Tepper, associate director of Vanderbilt University’s Curb Centre for Art, Enterprise and Public Policy, said in an e-mail.
‘So, you have the combination of a weakening visual icon – the dollar – and a growing international audience that will understand and connect to the image of the euro.’
As for Bundchen, she would not have been the first to favour contracts in other currencies. Others included billionaire investor Warren Buffett and Pimco managing director Bill Gross.
‘Any international business person that is moving assets around the world will want to do as many deals in the strongest currency available, which is certainly not the dollar these days,’ Mr Tepper added.
The dollar’s decline represents expectations that the United States economy will slow relative to other economies. Recent cuts to the Federal Reserve’s key interest rate have also weakened the dollar.
A weaker dollar also makes American goods cheaper and more competitive in foreign markets, tightening the trade deficit. It helps some US companies with operations abroad, whose profit is greater when converted into dollars. But at the same time, a cheaper dollar makes foreign goods and travel more expensive.
Source: ASSOCIATED PRESS (The Straits Times 21 Nov 07)