Strong Buck Doesn’t Help Consumers Big Bargains Aren’t In The Cards Despite Dollar’s Strength Vs. Yen

So what if the yen is 50 percent cheaper compared to the dollar than it was two years ago? Toyota Camrys aren’t selling for half price and nobody’s letting Sony television sets go cheap.

The dollar’s strength has helped keep increases down, but Americans shouldn’t expect any fire-sale prices on imported goods. Some questions and answers about the dollar’s stunning rise to four-year highs:

Q: Will a higher dollar and a weaker yen mean cheaper Japanese-made products?

A: Not much. Japanese manufacturers basically see a big profit boost when a $1 profit that had been worth 80 yen is now worth more than 120 yen. Struggling Japanese companies and the Japanese government have encouraged the dollar’s gain to help them through the country’s weak economy. Some Japanese manufacturers might be willing to cut prices to get a bigger piece of the U.S. market, but economists say they are outnumbered by the companies trying to lift their profits.

Q: My Honda was built in Ohio. Is that why it hasn’t been affected by the yen?

A: One reason Japanese manufacturers have moved so much of their factory space and jobs to the United States was to smooth out the disruption caused by currency fluctuations. So little of a Marysville, Ohio-built Honda comes from Japan that the weak yen matters little to the final price.

Q: What industries are particularly vulnerable to currency-rate fluctuations?

A: Autos and consumer electronics are the biggest Japanese exports to the United States. A higher dollar makes Japanese-made cars less expensive to import, but also makes U.S.-built vehicles more expensive in Japan. Japanese automakers haven’t lowered auto costs, but have kept price increases low. Consumer electronics are also less expensive to import, but few manufacturers have slashed prices. “The only deals you’re likely to find will be new technologies that are made only in Japan, like the digital video disks,” said Paul Gluckman, who heads the New York bureau for Television Digest, an electronics industry newsletter.

Q: Will there be any good deals thanks to the higher dollar?

A: Travel abroad is definitely cheaper. The dollar is not only higher against the yen, but also has gained considerably against some European currencies. So U.S. travelers will get more marks, francs or yen when they exchange their dollars.

Q: Why has the dollar risen so much?

A: The dollar benefits from weakness in the Japanese economy. Lower Japanese stock prices and historically low interest rates mean fewer investors with dollars are putting their money in Japan. That cuts down on demand for yen, making the yen cheaper. America’s healthy economy and slim inflation make the U.S. stock and bond markets look like better places for investment.

Q: Why has U.S. Treasury Secretary Robert Rubin encouraged a strong dollar?

A: Rubin has said the Clinton administration doesn’t see the dollar as a useful tool to boost U.S. exports and narrow trade deficits.