The New York Times reports on the Greenback losing appeal around the world not just in terms of acceptance as legal monetary tender but possibly also as seigniorage. The Times article notes that the iconic Taj Mahal “has stopped accepting dollars for the entrance fee, under a new edict from the Indian Ministry of Culture that also affects other national tourist sites like the 13th-century minaret known as the Qutb Minar and Humayun’s Tomb in Delhi. As a result, for entrance to the Taj Mahal, Americans must now pay 750 rupees, about $19, at the rate of 29.74 (sic) rupees to the dollar, compared with $15 previously”. That the Indian government continues to indulge in the economically illiterate practice of dual pricing – one for domestic travelers and another for foreigners is another matter.
On seigniorage, the WSJ article linked above notes the obvious negative brought about by the lower dollar in that it “reduces the wealth of the U.S. consumer in global terms, immediately through the dollar’s lower purchasing power, and longer term through the erosive impact of inflation” – obviously that is a deterrent to international travel for Americans. But closer home, hotels in gateway cities like New York, Orlando, Miami and San Francisco. besides US exporters are among those who have been fortunate enough to capitalize on the shrinking power of the greenback. Occupancies have bested last year’s January in each of those cities owing in no small measure to the influx of Euro and sterling clutching tourists coming ashore to shop and sight-see. Speculating on the path of the dollar for the rest of the year is best left to the experts but, if history is any guide, the downward slide is likely to be arrested if not reversed possibly by the end of this year. Meanwhile, with recessionary fears and high fuel costs, the dollar’s weakness is arguably the best news of 2008 for foreign tourists and US hotels alike.