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> The dollar dropped less than 10% against some currencies that were also devalued last week but by lower amounts than the greenback. Brazil, in a rare show of Latin independence, made a devaluation that leaves the cruzeiro worth 3% more in dollars than at the start of last week. The Italian lira floated down but was worth about 2% more in dollars than before.
> The dollar's price did not change at all against a long list of currencies that were also devalued by 10%. Generally, these were the moneys of nations that are greatly dependent on the U.S. for trade, aid, investment or tourism. Among them: the Mexican peso, Israeli pound, South Korean won and Greek drachma.
The clearest immediate winners in this complex of changes are the speculators, who made an estimated $350 million to $400 million in ten days on their purchases of marks alone. The Soviets will also get an estimated $ 100 million windfall on their grain deal with the U.S. They have about $1 billion in grain orders in the works, and they will now have to pay out less hard currency to buy the dollars that they need to purchase the wheat, corn and soybeans. West Germany won in a way; it avoided an increase in the price of the mark against European currencies. But the Germans paid a heavy price: in order to avoid floating the mark, the Bundesbank had to buy $6 billion of unwanted dollars, which will swell German inflation by expanding the country's money supply. The clearest losers are Japanese exporters, whose goods will become more expensive not only in the U.S. but in every other country as well. Japan, however, will pay less for its vital imports of food and raw materials.
Temptation. Was the U.S. a winner or a loser? Probably a winner, but how big a winner can be answered only as events unfold. For most Americans, the immediate impact of devaluation will be an increase in the prices of foreign goods. Though imports account for only 6.8% of U.S. consumption, foreign raw materials and parts go into countless finished products, and the rise in import costs will put upward pressure on countless prices. U.S. aluminum, for example, is made almost entirely from bauxite imported from Jamaica and Surinam; many coats and suits are tailored from Australian wool; and foreign steel goes into many new American buildings.
This week Volkswagen is expected to boost the price of the basic beetle from $2,059 to more than $2,200. Swiss watches are likely to go up 12% to 25%. Wholesale coffee prices jumped 2½¢ per Ib. last week, and will rise still higher. South African diamonds will go up 10% or more, meaning that lovers who proposed successfully on Valentine's Day can count on digging deeper into their pockets to buy the ring. The price of Château Bouscaut 1966, a Bordeaux wine, is expected to rise from $5.49 to $6.29, as are the prices of most European wines. Sam Aaron, president of Sherry-Lehmann, Manhattan's biggest wine dealer, predicts that "there will be a dramatic swing from the much higher-priced French wines to the better wines of California—and that state will not be able to keep up with the demand. One result will be constant increases in the price of California wines."