Word: dollarization
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Dates: during 1980-1989
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...upward surge of the superdollar was news around the globe. THE DOLLAR IS DEFYING ALL LAWS OF GRAVITY exclaimed Madrid's financial daily Cinco Dias. Newspapers across France's wide political spectrum were equally excited. Read the front page of Paris' conservative Le Figaro: OVER 10 FRANCS, THE DOLLAR HAS GONE THROUGH THE CEILING. One edition of the Socialist tabloid Le Matin included a replica of a $1 bill. By buying a copy for the newsstand price of 4 francs, the newspaper proclaimed, readers could get a "dollar" at a 60% discount...
Repercussions from the surge of the dollar were political as well as financial. In Rome, Italian Prime Minister Bettino Craxi called a special meeting of several Cabinet ministers to discuss what could be done to protect the lira. Said Lamberto Dini, the director general of the Bank of Italy: "Everyone is concerned, both in Italy and in Europe, because what is emerging is an unsustainable pattern of exchange rates." During her scheduled meeting with President Reagan in Washington this week, Britain's Prime Minister Margaret Thatcher intends to press for assurances that the Administration will take early steps...
Last week's currency-market gyrations demonstrated both the benefits and the detriment of a strong currency. The first-blush effect for Americans is good. A mighty dollar turns the world into a buyers' paradise for U.S. tourists. Americans appear to be signing up in record numbers for European vacation trips, to find antique bargains in London and enjoy three-star meals in Paris. Travel agencies report bookings are up more than 100% over last year. Says Jane Levin of Boston's Garber Travel: "Europe is going to sink into the ocean under the sheer weight of American tourists...
...dollar's rise, however, also has a darker side. It has made the products of U.S. firms more expensive abroad at the same time that they have to compete with lower prices for foreign goods at home. Complains Edward Jefferson, chairman of Du Pont: "Since 1980 the rise in the value of the dollar has put a 50% surcharge on all U.S. goods sold abroad, and a 50% subsidy on all imports...
...hear howls from Congressmen and lobbyists demanding protection against cheap imports. Motorola President John Mitchell has called for a 20% surcharge tariff on all foreign imports, and he is getting an increasingly sympathetic hearing on Capitol Hill. The Administration is also sensitive to the problems posed by the strong dollar. Conceded White House Chief of Staff Donald Regan: "We see the damaging effects, but we are puzzled as to how to get the dollar down...