Those headlines appear in the Thursday, May 30, 2002 edition of THE ARIZONA REPUBLIC. (Phoenix), which claims that the US dollar has been in a downtrend for the past 3 months. (Business Section.)

From the spring of 1995 until January of 2002, the US dollar appreciated 40% against the major currencies of the world. This trend is apparently over. A falling dollar works against cheaper Leica stuff. (For US buyers.)

According to the article, the National Association of Manufacturers (USA) is pressuring the Bush Administration to change its policy on the dollar, which they claim is overvalued, costing US companies $140 billion in lost export sales in the past 18 months, and has resulted in half a million job layoffs. ):

-- Frank Horn (owlhoot45@hotmail.com), May 31, 2002

Answers

Not that i don't think the dollar is overvalued, but this is an incredibly complex game countries play, and just because the manufacturers want the dollar devalued doesn't necessarily mean it is the best in terms of quality of life for the majority of americans. The statistics go both ways (in terms of job layoffs, etc.)... and this info is clearly biased towards manufacturers (not service providors - who comprise more of the US economy than manufacturers)...

-- Matthew Geddert (geddert@yahoo.com), May 31, 2002.

Us$ is 20% overvalued vs euro

-- martin tai (martin.tai@capcanada.com), May 31, 2002.

http://www.greenspun.com/bboard/q-and-a-fetch-msg.tcl? msg_id=007hho

-- martin tai (martin.tai@capcanada.com), May 31, 2002.

more defense spending, less tax revenue in a recession, government asked to do more, higher tuition costs, higher medical costs, higher service costs: higher inflation possible due to increased government spending, better equity values in europe, less investment in U.S. this year by oversea investors, much of this works to a lower dollar and eventual higher interest rares.

-- gary brown (drdad1111@yahoo.com), May 31, 2002.

correct there are many inidicators pointing towards a period of decreasing dollar, however, it is far from certain. The US domestic situation is only one side of the coin (no pun intended), simulanteously there have to be macro/micro reason for the Euro or Yen to rise, such as better investment climate/return on equity in Europe. For that to happen, European countries need to agree on a cross country fiscal/labor policy to decrease government spending, cute unemployment rates and taxes and so forth.

So while the US dollar have slowly been loosing ground towards the Euro, a more substantial "correction" is far from certain.

Bottom line, I think Leica US will swollow some of the currency flux for now. Increasing the already high price of the M7 - somewhat of a make or break product for the Leica house - is not a road management want to take (then again, Leica management has been known to take some quite rare roads...)

cheers,

-- pat (modlabs@yahoo.com), May 31, 2002.

Bottom line I'd love to see CNBC discuss the projected cost of a Leica M this year in light of all the above issues !!!

-- gary brown (drdad1111@yahoo.com), May 31, 2002.

Back in 1984-85 the dollar was very strong (almost reaching parity with the British pound, an opportunity missed, the Brits could have adopted the dollar as currency, or just tied it 1:1, kind of like the Panamanian Balboa).

-- marco grande (hektor73@yahoo.com), May 31, 2002.

Frank, It's already happening...the Euro from .87 appx to .93...the Looney hit a recent high of .65 this past week and the Yen has moved up perhaps 10% against the Dollar. Take heart, fellows. This enhances the value of your Leicas

-- George L. Doolittle (geodoolitt@aol.com), May 31, 2002.

Us$ is 20% overvalued vs euro

As some others have said, i really don't know if this statement is accurate. The dollar is a much more widely used currancy than the Euro, currently it is the "gold standard" (it used to literally be that - I think it was until Nixon - but now it is only figuratively). Though the euro could gain ground, it hasn't become the currency of choice for international transactions yet... thus they play very different rolls on the world market, and saying one is overvalued compared to the other other isn't really possible. The value of currency is whatever it is set to be by markets and governments... there is no "correct value" - one could say it is 20% overvalued compared to two years ago, but that doesn't matter - because it is correctly valued now... and if the invisible hand wants to sway it one way, the government may choose to keep it where it is by adjusting interest rates or increasing/decreasing the money supply.

-- Matthew Geddert (geddert@yahoo.com), May 31, 2002.

The dollar is already lost value vs gold bullion, the trend will continue.

Us$ is entering a secular bear market, and gold bullion is on a bull market

-- martin tai (martin.tai@capcanada.com), May 31, 2002.

I agree with Mr. Geddert about there being no correct value of a currency with floating exchange rates. Supply and demand are also factors. If more people choose to do international trade in US dollars, they have to find a supply of dollars to settle these transactions, creating a demand. Unless the Federal Reserve loosens its monetary policy, this would increase the dollar relative to other currencies.

-- saab900 (deezer@juno.com), May 31, 2002.

I read posts from time to time, by people complaining about what they believe ridiculously high prices for Leica equipment-- especially new equipment. Since around 1995, it has been my belief that Leica stuff has actually been more favorably priced (at least, here in USA). And the used Leica stuff has really gotten cheap. All these rebates and "Leica Days" have their origin in the strong dollar of recent years. Of course, there are other business factors than the relationship of currencies, which can affect Leica prices. Leica Camera AG stock seems to be trying to turn upward on the stock exchange, having gone from a low of $5.50 to a current $7.50, albeit on very low volume. I'd rather buy the products than the stock!

-- Frank Horn (owlhoot45@hotmail.com), May 31, 2002.

UBS is advising that the dollar will reach parity with the euro in the next 18-24 months.

-- Reto (redcavereto@yahoo.com), May 31, 2002.

The strong dollar was the result of being a safe haven.

-- martin tai (martin.tai@capcanada.com), June 01, 2002.