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'Weak dollar' tourists snap up festive bargains

By Julie Clothier for CNN
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(CNN) -- Take a wander down New York's Fifth Avenue this week, and chances are you'll hear more British accents than normal, belonging to tourists laden with shopping bags.

They'll be among the throngs of "weak-dollar" tourists who are in town to snap up a bargain on a currency that's worth almost half as much as the one they earn back home -- effectively slashing the price of electronics, clothing and other goods.

The U.S. dollar's value has dropped 12 percent against the pound in the past year and 10 percent against the euro, meaning foreign travelers have greater purchasing power in the U.S.

The dollar remained under pressure for a fourth day on Monday, as the euro soared briefly to a 20-month high point of 1.3179 dollars.

On Tuesday morning, the British pound was up another 0.3 percent against the dollar at $1.9453, close to Monday's high of $1.9465, a figure last hit in December 2004.

The New York Post described the depressed dollar as "turning Fifth Avenue into a virtual flea market for global travelers."

The newspaper says a record 7.3 million foreign tourists are expected to visit New York City by the end of 2006, and many will be taking advantage of the weak dollar, reaping huge savings on what they would spend on the same goods back home.

For example, a pair of ladies' straight leg 7 For All Mankind jeans retails for £169 ($327) in British department store Selfridges. In American department store Bloomingdales, the same pair of jeans sells for $143 (£73.80).

An Apple 30GB iPod retails for £189 ($366) in the UK, and for $249 (£128) in the U.S.

Make-up is also much cheaper for European travelers. Stila Tinted Moisturizer sells for £20 ($39) in the UK, and $28 (£14.50) in the U.S. But on Web site strawberrynet.com, it can be bough for as little as £8 ($15.50.)

European travel companies report that bargain-hungry shoppers are taking advantage of the favorable exchange rate to stock up on cheap goods.

AirlineNetwork.co.uk marketing manager Jamie Waterhouse told CNN that sales for the past week for trips to New York were up four percent on the same period last year of the total U.S. market.

Trips to Boston, another hot shopping destination, were up eight percent, Waterhouse said.

Of the trips booked in the past week, 10 percent were for trips to be taken before the end of the month, 20 percent were for December, 10 percent were for January and 20 percent for February.

"Bookings made in the past week for the end of November have a very late window. We would have to do research and ask customers exactly why they were booking but it seems the exchange rate is having an impact on sales," Waterhouse said.

He has booked a trip to New York for January to take advantage of the weakening dollar and the post-Christmas sales in the U.S.

"As the rate gets to $2, you get to the point where you just think, 'It's time to go shopping.'"

He said he would be looking to buy clothing, shoes and electronics.

John Bevan, travel director of the UK-based Web site lastminute.com, said there had been an increase in searches for New York in the past couple of weeks, but bookings were steady compared to this time last year.

"With Christmas shopping breaks being in demand at this time of year and with the good exchange rate we anticipate a increase in the next few weeks." Bevan said.

Expedia.co.uk says it has noticed a significant increase in the number of people booking trips to New York in 2006, with a 50 percent growth in sales compared to this time last year. In addition to New York, the company reports strong sales to Las Vegas, Orlando, Miami and San Francisco.

Minnesota is also a popular choice because it is home to the Mall of America, the world's largest shopping center, says The New York Post. Three non-stop flights arrive daily from Europe to Minnesota.

Currency strategist Mark Smith-Halvorsen, of London-based commercial foreign currency broker CorporateFX, told CNN the slump in the dollar was caused by negative economic data coming out of the U.S., dampening the chances of the Federal Reserve raising interest rates in the near future.

"Slumps of this kind, in the dollar, normally last only two or three days, but in this instance the dollar had shown no signs of bouncing back."

Smith-Halvorsen predicted the dollar would remain under pressure in the coming trading sessions, with pounds sterling potentially trading as high as $2 before Christmas.

"I don't believe there's enough positive data to come out of the U.S. to turn this around quickly. The market is bearish about the U.S. dollar at the moment. It would take a week to 10 days of positive data to see this trend reverse."

British Retail Consortium spokesman Richard Dodd told CNN he doubted whether the weak dollar would have a significant negative impact on British retailers.

"By the time you have taken your flight, the cost of accommodation, factored any tax you might have to pay on significant items, it doesn't really make economic sense for most people.

"Even though we have a strong pound, you really need to spend about £1,000 worth of goods before a trip abroad starts to pay off."

He said online sales accounted for only four percent of all retail sales in Britain and bargains to be had online would not affect UK shops.


story.shopping.gi.jpg

A plunge in the dollar means shopping in the U.S. is hugely desirable for European travelers right now.

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