Day of the dollar: A global connection
Men in rubber boots are swinging axes in the ice mist of the Tsukiji fish market. Frozen tuna skitters and slides across the warehouse floor, white slabs looking nothing like the delicate red flesh that will be sliced and rolled onto pretty plates in the sushi bars of Moscow, Berlin and Los Angeles.
Thwacks and clatter echo through the 5:30 a.m. auction on the Tokyo waterfront; it is the moment when the tuna harvest meets the calculations of international financial markets. Much of the world sleeps when prices are set on a fish that has become as precious to the sushi business as gasoline is to drivers.
The men cutting fins and tails are connected to something every bit as tumultuous as the seas: the U.S. dollar. The greenback was a reliable icon for decades, but its dramatic decline over the last five years is creating a world of winners and losers in the callous math of commerce, where the cost of a fish dangling from a hook in Asia is one man’s profit and another’s misfortune.
The dollar’s fate affects the lives of billions of people -- wheat farmers, black-market money-changers, writers and poor women bargaining for tiny white eggplants in musty souks. Beginning before dawn in Tokyo on Monday, The Times followed the dollar around the globe until the sun set in North Hollywood.
The low dollar keeps Japanese seafood buyers happy. It encourages New England fishermen to sell stocks of coveted Atlantic bluefin tuna in Japan, where they can be paid in more valuable yen. This is spurring Kazuaki Shimura, a deputy general manager for Daito Gyorui, one of Tsukiji’s powerful trading houses, to take advantage of the U.S. currency to offset high oil prices and shrinking fish stocks. His company will send buyers to Boston this year to guarantee the inventory.
“If the Americans get a good catch, we’ll go in August,” he says, leaning back in his chair as company accountants tally the day’s take. “We have to seize the opportunity while the dollar is still down.”
Similar strategies are devised countless times a day. Scribbled into ledgers, typed into computers, flashed onto tote boards, the dollar’s travails are an enduring, unpredictable narrative. Some curse the U.S. currency, others revel in the rewards its shrinking stature offers, yet they are all connected to the world’s most recognizable symbol: George Washington’s face on a swatch of green.
In a region of china that manufactures Christmas for much of the world, Du Xiufeng is not a jolly man. He once made $62,000 selling 120,000 snowman stockings to Wal-Mart. Much has changed in the two years since, and Du, who speaks through clenched teeth and has become as thin as his wallet, can’t even turn a penny profit on such orders anymore.
The dollar has fallen so fast against the yuan in recent months that Du winces at the currency rate updates arriving on his cellphone. Last October, he won an order to make 150,000 travel blankets for Target. Du calculated that after production costs he’d a earn nickel profit on each. But the adjusted exchange rate wiped out the entire $7,500 he was hoping to pocket.
“Di, di, di” - down, down, down, he says in his warehouse in Yiwu, a city in eastern China’s Zhejiang province. “Every falling cent is like cutting flesh from me.”
Hundreds of factories here, many of them no more than home workshops, make Santa hats, Christmas tree ornaments and other holiday decorations. The owners and seamstresses are battered by market whims: Beijing has allowed the dollar to fall 14% against the yuan since 2006, which has forced some factories to close and others to fire workers. Du has let half his 120 employees go while contending with surging oil prices and the escalating cost of materials.
He used to take Sundays off, visiting teahouses and driving with his wife and 6-year-old daughter in their BMW sport utility vehicle. No more. Now it’s 11-hour shifts, seven days a week. He shuttles between his cluttered warehouse, a small sewing shop in the city and a bigger operation in farmland 60 miles away. He sits in front of a computer trying to make the numbers work. They don’t.
“The pressure’s getting bigger and bigger,” he says, moments after his cellphone announced that the dollar had fallen another notch. “It’s cruel, isn’t it?”
Smoking a pipe in an inner sanctum reached through two electronically locked doors, Asoke K. Laha heads an army of software engineers whose ingenuity knows no national boundaries. Eyes fixed on hundreds of glowing computer screens, they write the programs that help companies such as Universal Studios and Amtrak keep their operations running smoothly.
The growing U.S. reliance on such small- to medium-sized IT companies propels India’s booming economy. But that connection also leaves the companies vulnerable. With 90% of its business from American clients, Laha’s Interra Information Technologies earns nearly all its money in dollars. Yet the company’s rent, salaries and transportation costs are in Indian rupees. With the fall of the greenback, many firms are faced with dropping revenue.
“For my business, the dollar has a serious impact,” says Laha, who jets between India and Interra’s U.S. headquarters in San Jose. The firm’s Indian operations grew from a few rooms in Laha’s New Delhi home to two floors of an office building in an industrial park in Noida, a burgeoning satellite city.
The dollar’s plunge halved Laha’s profit and forced him to lay off 20 employees. The currency hasn’t fallen as far as he had feared, but these are uncertain times in an industry interlaced with the American economy.
“If there is another 15% drop, lots of companies will die,” Laha says. “You have to wait for the storm and hope for the best.”
Interra wants to reduce its exposure to the dollar by broadening its client base in Britain, Australia and other English-speaking countries. But the U.S. remains the biggest market for software companies, which leaves Laha with few choices but to jockey for advantage and keep prices down.
“Competition is so fierce that there’s no room to increase the rates,” he says. “I say I increase the rate and they say, ‘Sorry, I’ll go to someone else.’ ”
Thousands of miles away from the Indian heat, workers shiver in near-freezing temperatures in the oil fields of Siberia.
Ravil Mukhamedzyanov earns $1,500 a month pumping oil for the Lukoil West-Siberia company. He lives in one of those company neighborhoods that dress up the fact that he’s in the middle of nowhere in a town, Kogalym, whose name roughly translates as “death trap.” Mukhamedzyanov is troubled by the bumps and blips befalling the dollar.
“I don’t know exactly how that affects me, but I have a gut feeling that it does,” he says. “And I don’t like it.”
The dollar -- oh, that fabulous flash of green: Locked in safes, slipped under pillows, hidden in socks, it was the symbol of stability for Russians immediately after the Cold War.
“In the ‘90s, the dollar in the minds of our people replaced the symbols of communism,” Alexei Kanayev says, leaning against his new black Chevrolet Captiva in a garage with a big dollar sign painted inside the door in the nearby town of Russkinskiye. “People believed in it more than in the past Soviet symbols.”
It wasn’t that long ago that the oil workers and the fur trappers here thought the greenback might replace the inflation-prone ruble. Not so. Powered by Russian oil, the ruble is gaining these days and the dollar is faltering; the markets are reconfiguring the comforting notions of the past.
“The price of gasoline is so steep that you now have to think twice before making a 60-kilometer [37-mile] ride,” says Kanayev, a mechanic for an oil company. “Other prices have gone up too, and all because of the weak dollar. The dollar betrayed us.”
The woman in the black abaya walks through broken sunlight in a market, balancing a plastic bag of tomatoes in one hand while the fingers of the other ripple over onions, green beans, carrots, nuts and white eggplants. Layla Youssef is stingy with her Egyptian pounds. She has to be. She and her husband live on a 700-pound, or $127, monthly pension.
Inflation is crippling her country, and because the pound is pegged to the weak U.S. dollar, the burden grows heavier as the cost of foreign imports rises. The market’s shoppers are shoulder to shoulder, bickering over the math of survival and how a kilo of potatoes once sold for 9 cents but now sells for 32 cents, or how chicken went from $1.31 to $5.62.
“We stopped eating fruit to save money,” Youssef says. “We stopped doing laundry every day and only do it twice a week. We used to buy an 8-kilogram package of detergent for [$3.37]. Now that same pack costs [$10.49]. Thank God, though, we have it better than others. There are people who can’t afford bread. We have not reached the point of eating chicken skeletons like many people do.”
Youssef is a grandmother with a clear face and hands rough from cleaning and mending. She pushes deeper into the market, late in the morning, when things maybe aren’t as fresh but they are cheaper. She steps past a basket of broken peaches and a storm of flies, past clouds of steel wool and a tin of coal, to a man in an apron yelling out pasta prices, which have jumped from 47 cents to 75 cents. Chants from the Koran crackle out of a radio; a man on a bike, loaves of puffed bread teetering on his head, pedals through the traffic.
“Those of us alive,” Youssef says, “envy the dead.”
Roland is not dead, though some wish for his demise. He’s a Zimbabwean profiteer, a billionaire in his nation’s nearly worthless money, a man who above all loves the greenback.
He had a steady job as a payroll administrator, but he gave it up to trade currency on the black market in this capital.
It works like this: Simply by holding on to dollars for a day, you watch the exchange rates change -- once in the morning, once in the afternoon, once in the evening and bingo, the dollar has appreciated and you’re $50 billion richer. Zimbabwean dollars, that is.
On this day it takes 5.5 billion Zimbabwean dollars to equal one U.S. dollar, but still, that means Roland has cleared about nine U.S. dollars.
“If you put your money in U.S. dollars, it will appreciate in value,” Roland says, his eyes peeled for cops. “In a week, if the week is good, without any raids, you can make up to $100.”
The Zimbabwe dollar is so listless that it makes even the diminishing U.S. dollar seem as confident as a John Wayne character. The American currency has swagger here; businessmen have been drawn to it since the collapse of commercial farming in 2000. Landlords and traders have started demanding rent or payments for large items like cars or land in U.S. dollars.
Being a multibillionaire in Zimbabwean dollars has its problems, though. There’s not much to buy in Harare’s shops, so Roland goes to neighboring countries, bringing back electronic goods that, along with his two types of dollars, he sells on the black market.
It is not raining in Normandy, but umbrellas blossom inside Jean-Pierre Yvon’s factory: steel gray, midnight blue, lilac. They are slender, elegant, destined for Cartier and Van Cleef & Arpels. But not so many are shipped to the United States these days, not while the dollar shrinks, pathetically shrivels, against the euro.
Yvon’s U.S. distributor promised orders worth $310,000 more than a year ago. None came through. His umbrellas have gone the way of champagne and European vacations -- too expensive for American pocketbooks. Yvon once had a big overseas market: 60% of the 3,000 umbrellas assembled annually by his workers, who embroider and glue with the meticulous fervor of a small orchestra. But exports have fallen to about one-third.
“An umbrella is not just designed to be useful,” says Yvon, who, inspired by the Catherine Deneuve film “The Umbrellas of Cherbourg,” opened his factory 22 years ago in the same town. “It has to be beautiful, aesthetic and harmonious, an accessory that must last a lifetime.”
A trim man with rectangular glasses, Yvon used to run a kiosk near the harbor station, where American tourists would rush off cruise ships to buy umbrellas made famous by a movie. He has since closed the kiosk, relying these days on Europeans willing to spend more than $200 for a snap of canvas beneath Normandy’s fickle skies.
A retired French couple, Pierre and Monique, browse the shop, weighing choices of bright colors or dark and sober, extra large for shelter or flexible and easy to carry.
Pierre wants a large one with a heavy stick. “It’s a self-defense umbrella,” he says.
“It’s an authentic Cherbourg -- you might as well have a very large one,” says Monique, who chooses a sandy-colored model that fits in her handbag. Pierre decides on a “golf” burgundy and has his initials put on it.
The italian millionaire is on his way and Anne Marie Moriarty paces in her cubicle high above Madison Avenue. Beyond her floats the Manhattan skyline, so beautifully, so wonderfully for sale. Americans may be in a sub-prime crisis, but those with euro bank accounts are shopping for big-game real estate.
This is good for Moriarty, a vice president with the Corcoran realty company. In the last 18 months, her sales to international clients have doubled. She shows Manhattan properties to a dozen or so foreigners every month, producing about eight sales. She keeps an Italian-speaking lawyer on retainer; the majority of her customers are either Italian or Irish, nationalities that arrived here poor and hungry more than a century ago.
“A lot of them come with empty suitcases,” says Moriarty, noting that European clients often tailor their apartment hunting around high-end shopping expeditions.
A few minutes later, standing outside her Upper East Side office, she lights up a cigarette and answers her cellphone. Then Moriarty, in a casual but smart blue-and-green dress, slips into a waiting town car that slides through Manhattan traffic. Her client, the Italian, is staying at the Soho Grand, a downtown boutique hotel.
She spots him. Ah, Stefano. Air kiss. Stefano is the only name he gives. He recently spent $12 million on four apartments in an unfinished building across the street from the hotel. His family paid $5 million more on two other apartments -- one in Soho and one in Chelsea. With the euro so strong against the dollar, the Italians consider it a good business opportunity to buy “something like super-luxe,” Stefano says.
It’s hazy hot in the city; Stefano and Moriarty stroll over to Wooster Street to talk with the unfinished building’s sales manager, Heather McDonough. She walks them through the construction. When the building is complete this year, there will be outdoor hot tubs, a round-the-clock concierge and a fitness center.
Foreigners have bought two-thirds of the apartments in the building.
“If you spend a weekend day walking around Soho, you don’t hear English,” McDonough says.
The weak dollar, Moriarty says, is “good for my business.”
Follow the dollar south to Havana, where Maria Lugo, a mother who has spent a lifetime searching for silver linings, smiles at the cash in her hands, a money transfer from her son in Miami.
She didn’t know whether it would come this week; Luis had lost his construction job to the housing crisis. But he found new work as a mechanic. His $100 transfer is changed into 80.40 Cuban convertible pesos.
Lugo, a 51-year-old driver for a state-run company, is like many on this island, desperate for monthly remittances sent, mostly in $100 increments, from the U.S. She quickly heads for the hard-currency grocery stores between seaside Miramar and colonial Old Havana.
“He was so depressed when I spoke to him the last time,” she says of her son. “I feel like God heard that and sent a miracle down from heaven.”
The dollar’s slide has been hard on Cuba, where the peso is pegged to a basket of currencies that include the U.S. dollar. In a swipe at Washington after the Bush administration further tightened sanctions in 2004, then-President Fidel Castro slapped a 10% conversion fee on the dollar and reduced its value against the peso by 10% more. That stripped the greenback of 20% of its worth even before it tumbled on international markets and food costs began soaring around the globe.
The Supermercado 70 grocery store is flush: Canadian breakfast cereals, Italian pastas, Spanish frozen foods and Chilean toiletries. Lugo smiles through quick mental calculations of per-100-gram costs and the shelf life of industrial-sized products. The goods, which supplement government rations of rice, beans and bread, are more expensive these days.
She buys 3 pounds of chicken legs, enough beef brisket for one good stew, a package of chorizo and one of hot dogs, a can of tuna, laundry soap, a tube of toothpaste and some paper napkins.
“We used to feel so fortunate when Luisito sent this money and we could eat decently for the whole month,” Lugo says.
“We still know we are lucky, but you can feel the difference right here,” she says, patting her stomach.
If another inch of rain falls and the Colorado hailstorms keep their distance, the wheat in Kent Kalcevic’s fields will soon be ready for harvest. If all goes according to plan -- and given the ways of farming it could just as likely not -- Kalcevic may get a record price of more than $9 a bushel.
“I like seeing a weak dollar,” he says, sitting in an air-conditioned office on his 90,000-acre farm, scanning the Internet for the latest on wheat price fluctuations. The dollar’s drop means American exports, such as corn and winter wheat, are coveted by international customers with more purchasing power.
Kalcevic’s family has worked this Adams County land for four generations; his great-grandfather arrived from Austria in the late 1880s to work in a steel mill, but eventually saved enough to buy the first 160 acres. The wheat harvested here ends up in Papa John’s pizza dough or gets loaded onto rail cars and, depending on the deal, can be shipped to Japan, Mexico, South Korea, Nigeria.
The profits from foreign sales have helped Kalcevic buy two new combines at about $220,000 apiece, as well as two sprayers at $240,000 apiece. But for the rest of June, Kent Kalcevic, a lean man with a buzz cut, and his cousin Jeff, who was driving pickups long before he folded a license into his wallet, will watch the wheat and the sky. It is an edgy month.
“Everyone gets a little different,” Kent says.
“A little grouchier,” Jeff corrects him.
Kent chews tobacco; Jeff chews toothpicks since his wife made him quit chewing tobacco.
They review the dangers. Storms are fierce in eastern Colorado, with winds and hail that leave birds dead and peels the paint off mailboxes. Then there’s fire. The rule in these parts: “When we see a puff of smoke at harvest time,” Kalcevic says, “everyone goes.”
They scan the horizon. The dollar had better not surprise them.
The day is nearly finished. The North Hollywood sky is turning from blue to pink to orange, slipping into gray. Shig Chiba, quick as ever with his knife, slices fish and garlic in the sushi restaurant that bears his name.
Much of the seafood glistening beneath his blade -- scallops, sea bream, mackerel, squid, yellowtail -- is shipped in from the Tsukiji market in Tokyo. There’s a symmetry to that. Chiba is from Japan himself, a man who, like the fish, traveled across the ocean to a restaurant of white tablecloths, nestled among auto repair shops and service stations.
The auction men who hours earlier set prices at Tsukiji affect what fish are cut and rolled with Chiba’s ginger and green onions. Since the dollar began its precipitous tumble against the Japanese yen and other currencies, the price Chiba pays for fish has risen more than 30%.
Toro, the highly prized fatty tuna, now costs $60 a pound, up from $38 a year ago. But the price of albacore, supplied from California and Canadian waters, has been stable -- only about $6.75 a pound. Chiba breaks even at best on toro and other expensive fish, and tries to make up for that with higher profit margins on albacore.
That math brings sleepless nights. He’s decided against trimming his staff of eight sushi chefs and kitchen workers. Instead, he increased his prices by about 10%, and carries lower inventories of fish, steamed towels and other products; he’s trying to reduce utility bills by converting some of his lighting to fluorescent bulbs.
“Irrasshai!” Chiba greets his customers, Armenians, Latinos and others working in film, video, medicine, education and construction. Four generations of the Ysais family are celebrating the sixth-grade graduation of Desiree.
Chiba knows many of his customers are facing tough times too.
“Yeah, we’re hurting, but others are hurting more,” Chiba says. “People can’t go on vacation or road trips because of the gas prices. So they go out to eat. And when they do, I want to make sure they’re more happy walking out than when they came in.”
Life has somehow hardened. The world is smaller, more connected, more expensive than four decades ago when Chiba’s father, a Japanese immigrant, set foot in America and opened a restaurant in Los Angeles with a dream and hard-earned dollars.
Your guide to our clean energy future
Get our Boiling Point newsletter for the latest on the power sector, water wars and more — and what they mean for California.
You may occasionally receive promotional content from the Los Angeles Times.