COLUMN ONE : The World Still Loves the Dollar : Whether it’s a taxi in Cambodia or Dutch oil, the bill is in bucks. In effect, other nations’ largely undimmed passion for greenbacks helps fuel debt-racked America’s global shopping binge.

For the band of traders who peddle souvenirs to tourists taking in the sweeping view of the Russian capital near Moscow State University, there is one preferred currency for doing business: the U.S. dollar. Even the local police like their bribes in greenbacks.

Half a world away in the Cambodian capital, Phnom Penh, foreigners entering the country must pay for an entry visa, a hotel taxi and the hotel itself in a single currency: the U.S. dollar.

In Hamburg, Germany, a local trader buys oil from a Dutch company and ships it to Switzerland. The transaction is completed in a single currency: the U.S. dollar.

“It’s the global currency,” says Peter Stroink, a spokesman for Royal Dutch Shell in Rotterdam, the Netherlands. “That’s the tradition, that’s the reality.”

And to a far greater extent than most Americans appreciate, that simple fact is responsible for much of their current prosperity.

In effect, the rest of the world is helping Americans go on a global shopping binge. It is a benefit no one else has--one the late French President Charles de Gaulle called the “exorbitant privilege” of the country with the leading international currency.

Exorbitant indeed. As recently as 1980, the United States had a credit of $400 billion with the rest of the world--in effect, a positive balance of $400 billion on its global credit card.

But so profligate has America been since then that the United States today is easily the world’s biggest debtor country, with a negative credit balance of a staggering $550 billion.

What if dollars suddenly fell out of fashion around the world? What if other countries were no longer eager to get their hands on American greenbacks?

In effect, America would be disciplined, much as a youth whose parents take away his credit card. But in this case the mechanism would be the law of supply and demand: The dollar’s new global unpopularity would drive its price down, as surely as unpopular cars cost less than desirable ones.

While the cheaper dollar would have some advantages for Americans, the bad news would be that the dollar’s buying power overseas would shrivel.

In short, Americans would find that they could afford fewer Sony video recorders and BMW sedans and less Chanel perfume than now. Their standard of living would take a turn for the worse--a sharp turn.

Already the dollar is showing signs of losing some of its global magic. It has taken a beating against the Japanese currency; in June, for the first time since World War II, it bought fewer than 100 yen. It once bought 360.

But the shopping spree goes on.

In fact, the most recent government figures show that in July, Americans registered an $11-billion deficit in their trade in goods with the rest of the world, the second-largest monthly figure ever.

That means Americans added another $11 billion to the supply of dollars floating around outside the United States.

They could do that only because the preferred currency, whether in Moscow, Mogadishu or Montevideo, remains the U.S. dollar. Foreign governments, banks, businesses and individuals still cannot get enough of it.

Consider:

* Trade. Although the United States accounts for only 12.5% of international trade, slightly more than half of the $3.7 trillion in goods and services sold across international borders last year were priced and paid for in U.S. dollars.

Every drop of crude oil, no matter where produced or where consumed, is bought and sold in dollars. The same is true of many other commodities, such as sugar, wheat, coffee, cotton, natural gas, gold, silver, zinc, lead and copper.

Likewise for many other products that will never have anything directly to do with the United States: cotton shirts made in India and sold to Tanzania, Argentine beef exported to Mexico, Polish ham packaged in Denmark and shipped to Canada.

Even in Japan, where there is a national allergy to foreign-made goods, the greenback is an exception. Nearly half of Japan’s exports are sold for U.S. dollars, according to the Ministry for International Trade and Industry, and Tokyo pays for nearly three-quarters of its imports in dollars.

* Reserves. The dollar remains the preferred currency for global reserves--money socked away in government central banks to guarantee a nation’s financial stability and well-being in much the same way a savings account provides security for a family.

Of the $1.1 trillion in official reserves held by central banks throughout the world, just over 60% is held in U.S. dollars, according to the International Monetary Fund. Led by the new economic powers of the Asian Pacific region, developing nations alone added $250 billion to their reserves from 1988 to 1993. Among the world’s largest holders of U.S. dollars, with $51 billion, is little Taiwan.

* Foreign exchange. A study by the Bank for International Settlements in Basel, Switzerland, found that of the $880 billion worth of currency traded daily on global foreign exchange markets in April, 1992, the U.S. dollar was involved in no less than 83% of all deals.

Anyone in Tokyo wanting to trade yen for German marks must first sell the yen for dollars. Only with dollars is it possible to buy the marks.

* Cash. The U.S. Federal Reserve Board has found a steady increase in demand for cash dollars abroad since the early 1960s. In 1991, the latest year for which the Fed has figures, there were nearly twice as many greenbacks floating around outside the United States as there were within the 50 states.

Seven of every 10 $100 bills in circulation were estimated to be physically outside the United States in 1991, and Fed officials believe the share is higher today. “There’s a large potential market out there, with the Russian appetite for dollars unslaked and the Chinese looming over the horizon,” said Richard Porter, a Fed economist.

Battered Bucks

But even all this has not been enough to stem a sharp decline of the dollar against the world’s strongest currencies.

Compared with 20 years ago, it now takes nearly three times as many dollars to buy a Japanese television set or a Swiss watch whose price in the local currency has not changed. On a similar basis, the cost of a German car has more than doubled.

But at the same time, the dollar has gained strength against the currencies of some of America’s biggest trading partners. The dollar’s power to buy Canadian lumber, British marmalade and Brazilian coffee has actually increased since 1973.

Besides sustaining a comfortable lifestyle, the dollar’s global popularity provides Americans other, more subtle, benefits.

“The dollar is a symbol of power worldwide,” noted an international economist. “It’s part of what makes other countries look up to the United States as the world’s preeminent economy.”

Norbert Walter, chief economist at Germany’s largest financial institution, the Deutsche Bank in Frankfurt, added: “The dollar is not just a strong currency. It is the reflection of a strong continent which comprises military, political and economic power.”

The dollar emerged as an international currency in the years after World War I as nations sought an alternative to the British pound when Britain abandoned the gold standard. The greenback’s rise helped signal that the era of Pax Britannia was ending and that the American Century was at hand.

After World War II the dollar became the global currency, reflecting America’s dominance at a time when Germans survived in bombed-out ruins, Parisians limped along on four hours of electricity a day, the Japanese reeled from nuclear destruction and even the victorious British were forced to grub for coal to keep warm.

Unchallenged in the Pacific, dominant in Europe, the United States held two-thirds of the world’s gold reserves, half of its manufacturing production and half of its shipping capacity. It supplied one-third of total global exports.

Just as English quickly became the Western world’s lingua franca, so too did the dollar become its accepted medium for business.

Today America’s relative power in the world has diminished. Europe collectively outproduces the United States by a wide margin. Japan’s trading power seems to mock American efforts to control it. The U.S. share of global exports is less than half of what it was in the late 1940s.

Still, the dollar holds its monopoly.

Pakistanis and Thais, Kenyans and Filipinos, Canadians and Chileans--people everywhere have grown accustomed to communicating in English and conducting their trade in U.S. dollars.

“It’s a common denominator,” said Miron Mushkat, chief economist for Asia at Lehman Bros. in Tokyo. “If you have multiple parties engaged in trade, they need . . . a common language. It’s very difficult to trade with hundreds of countries in their own currency. If I have to deal with China in Mandarin, with Malaysia in Malaysian and with the Philippines in Tagalog, this is very costly. Over time, one language, one currency dominates international trade and commerce.”

Easy to Use

While America’s position as the world’s leading trading nation certainly helps keep the dollar popular, the American currency is also easy to use.

Like a bottle of Coke or a pair of Levi’s, the dollar is instantly recognizable. Unlike those of other major currencies such as the yen, the mark and the Swiss franc, all dollar denominations are the same size, shape and color. What’s more, U.S. paper money has not changed in more than half a century.

“It’s good to know the presidents,” noted Sasha Ivanov, a 27-year-old Muscovite whose street-side table in the city’s Sparrow Hills tourist area is stacked with nesting dolls, amber jewelry and other trinkets he hopes to sell for dollars. “I know them all in order: It goes Washington, Lincoln, Hamilton. . . . “

“No, you’re wrong,” interrupted another trader, Dmitri Turkin, triumphantly. “It goes Washington, Jefferson, Lincoln, Hamilton, Jackson, Grant, Franklin. You forgot the $2 bill.”

The Russian language probably has more words for the dollar than for the ruble: baksi (bucks), zelyonyiye (green), kapusta (cabbage), krop (dill), zelon (green herbs) and even just green in accented English.

“There’s no currency here more widely accepted than American dollars,” said Igor Doronin, chief adviser of the Moscow Interbank Currency Exchange. “Just try to use Swiss francs or Japanese yen here. No one will take them. No one knows what they are.”

The story is similar almost everywhere.

In Rio de Janeiro: “When people come from Europe or Asia or other countries, they don’t bring their money; they bring dollars because they know they can get a better exchange rate,” said Fabio Mamedio, whose downtown Rio travel agencies have changed money for years. “If they bring yen or francs, I charge them an extra 10% because there’s just no demand for it.”

Never mind the local currency; the British Broadcasting Corp.’s World Service programs routinely note business dealings in U.S. dollars. Despite their multinational membership, the International Monetary Fund, the World Bank and the Organization for Economic Cooperation and Development invariably express statistics in dollars.

Before the collapse of communism in Eastern Europe, anyone managing to get hold of a few dollars could go to special hard-currency stores to buy goods impossible to purchase with local money.

A standing joke in Warsaw holds that the only similarity between the United States and Communist-era Poland was that a dollar could buy anything in either country, while the Polish zloty was worthless in both.

Although the post-Communist zloty has become a currency of genuine value, the dollar remains king in Poland. Buy a foreign car in Warsaw and the price is in dollars. Renting property to foreigners for dollars may be technically illegal, but many Polish landlords do it.

“The dollar is the hedge against inflation,” one Warsaw resident said. “It’s the basis people compare everything to.”

In Latin America, where national currencies have been historically vulnerable to bouts of hyper-inflation that make them all but worthless, citizens have frequently turned to the dollar. Brazil is the latest example.

With an inflation rate reaching thousands of percentage points per year, many Brazilians used the dollar as a measuring stick for what things really cost. “It was the reference point,” said Clarice Pechman, executive director of the Brazilian Assn. of Exchange Dealers.

In the business community, merchants routinely asked that long-term agreements and payments on consignment be made in dollars, even though this was technically illegal.

“You had to do it,” said Antonio Gomes, a furniture maker. “Otherwise, by the time you got your money in cruzeiros, it could be half or even one-third of the original selling price.”

A black market quickly developed to supply dollars to those who wanted to hold more than the government allowed. Newscasts routinely broadcast not only the dollar’s official exchange rate but the black market rate. So many dollars were circulating by 1988 that the central bank began legalizing some dollar outlets and buying dollars itself from what was once the black market.

In July, Brazil introduced a new currency, the real, and pegged its value to that of the U.S. dollar. That brought inflation down to about 2% in August from the 50% rate in June, the last month of the cruzeiro.

But the public remains understandably jittery. Rosanna Gois, an administrative assistant at a Sao Paulo architectural firm, is just one of many Brazilians who are not quite ready to declare the government’s new economic plan a success and give up their caches of dollars.

“These plans come and go,” she said. “But I know that the dollar is always going to be there.”

Neighboring Argentina experienced a similar crisis and tried a similar solution. As inflation reached 100% a month in the late 1980s, supermarkets had teams of employees whose only job was to go through shelves and mark up prices.

Finally, Argentina did what Brazil would do a few years later--it “dollarized” the economy by fixing the Argentine peso’s value to the dollar and committing the central bank to offering dollars at a guaranteed rate to anyone who wanted them. Now inflation has dropped to U.S. levels and the economy is growing, but new strains are also apparent that make economists worry whether keeping pace with the dollar might be too much to ask of Argentina’s economy.

It is only in the past decade that other currencies--namely the mark and the yen--have grown in importance in global finance. And it is only recently that they have begun cutting into the dollar’s preeminence.

The Competition

Despite the cases of Brazil and Argentina, the number of foreign countries that peg their currencies’ values directly to the dollar has dropped from 36 in 1988 to 20 today. Industrialized nations have reduced the percentage of their central bank reserves held in dollars. Even the greenback’s presence in 83% of all foreign exchange dealings represents a drop from 90% in 1989.

Jozef Van’t Dack, an economist with the Bank for International Settlements, also sees evidence that the mark, yen and ecu--an artificial, weighted mixture of several European currencies--have begun to erode the dollar as an invoicing currency and medium of exchange.

“International investors don’t like the dollar,” he maintained. “You can see it in the latest figures. Over the last 20 years, the mark and yen have become much more important.”

Andrew Smith, a currency specialist at the London-based securities firm UBS Ltd., calls this part of a “measured decay” of the dollar, an inevitable consequence of chronic, massive U.S. trade deficits. “It’s the same thing that happened to the pound,” he said.

Still, few see an immediate threat to the dollar’s worldwide dominance. “These are tectonic shifts that will take decades to play out,” Smith said.

Other factors have blocked the yen and mark from playing roles commensurate with their strength:

* The attraction of a nation’s currency is more than simply a reflection of its economic might. It is a measure of a country’s power--military and political as well as economic. Nearly half a century after the end of World War II, both Germany and Japan remain military midgets that play only marginal roles in shaping major global political decisions. Only the United States is giant in all three departments.

* For many years, both the German and Japanese central banks actively opposed the use of their currencies as global reserves, fearing that large foreign holdings would sap their ability to manage their own economies.

“A deutsche mark in foreign hands meant that something unexpected could happen,” explained Walter, the Deutsche Bank chief economist. “The Bundesbank feared earthquakes, landslides. Only when they realized they could not prevent the mark being used as a reserve currency did they grudgingly accept it.”

At the Bank of Japan, it was the mid-1980s before resistance to foreign holdings of yen turned to reluctant acceptance.

* A lingering antipathy toward Germany in Europe and toward Japan in East Asia has dampened enthusiasm for holdings of both currencies in the regions where they would naturally be the strongest.

Because of these and other factors, many currency specialists find it hard to see how the dollar could ever be completely eclipsed.

“The dollar’s importance will decline gradually over time, but it will still keep the dominant position it has had in the past,” said Van’t Dack.

“Demand for the dollar will remain,” argued Walter. “You would need massive mistakes like another Vietnam and a weak, vacillating (Jimmy) Carter presidency with all the costs and political errors associated with them to change this.”

New technology and sophisticated new currency markets have helped blunt any perceived need to switch from a sagging dollar.

“It’s not so much a question of dollar strength; it’s more the growing irrelevance of denomination,” said Bank of International Settlements economist Gavin Bingham. “It’s now much easier to protect against a currency exposure than in the past, so there’s no pressure to move away from the dollar.

“The dollar is the premier currency and will remain so. The weight of history will keep it there.”

Times staff writers Rone Tempest in Beijing, William R. Long in Buenos Aires, Michael Parks in Jerusalem, Juanita Darling in Mexico City, Ron Harris in Rio de Janeiro, Charles P. Wallace in Singapore, David Holley in Tokyo, Dean E. Murphy in Warsaw and Joel Havemann in Washington contributed to this report, as did Steven Gutterman and Beth Knobel of The Times’ Moscow Bureau.

The Mighty Dollar

The value of the U.S. dollar against other major currencies, calculated by showing how much of the particular currency $1 would buy:

Advantages of a strong dollar

* Foreign vacations cheaper for American tourists.

* Imports cost less in American stores.

* The price of imported raw materials and components for American industry are reduced.

* America’s image is enhanced overseas.

Advantages of a weak dollar

* American exports become cheaper and thus more competitive on world markets.

* The attractiveness of foreign investment in the United States is increased.

* More foreign tourists visit U.S.

Source: U.S. Federal Reserve Board