Weak dollar doesn't have to be all pain, no gain

— -- The dollar is so weak these days that panhandlers have started asking if you can spare a euro. It's so weak that Starbucks charges $10 a cup in Paris. Coffee costs $20 extra. Weak, weak.

The dollar has indeed taken a pounding this year. Aside from the pinch it gives U.S. tourists, though, is a weak dollar all that bad? Yes and no. In some ways, you can gain from a weaker dollar, provided you don't spend all your profits in France.

You'll need to plunk down $1.47 to buy 1 euro, the pan-European currency, compared with only 83 cents in October 2000. The dollar has fallen about 11% against the euro this year.

The euro isn't the only currency that's been smacking the buck. It takes $1.07 to buy a Canadian dollar and $2.11 to buy a British pound.

If you go to Europe, you'll feel the pain. A 5-euro latte at Starbucks will set you back $7.35. And higher prices for tourists aren't the only fallout from the weaker dollar. Here are some other consequences:

•Higher prices for imports. If you're in the market for Brazilian bongos or Canadian crackers, the dollar's tumble means you'll pay higher prices for the same goods.

•Lower prices for exports. Suppose you sold sweaters to Swedes; each sweater cost $100. When the euro was 89 cents, a person in Sweden would pay 112 euros for a sweater. But at the current $1.47 per euro, the same sweater would cost just 68 euros.

•Higher returns from foreign stocks and bonds. Suppose you'd bought 100 shares of the fictional Brussels Grouts, a plumbing supply firm, for 15 euros a share. At the time, 1 euro equaled $1.10. So your purchase cost $1,650. Now, the stock is still selling for 15 euros a share. But a euro is worth $1.47. Your investment is now worth $2,205, even though the stock's share price hasn't budged.

So imports are more expensive, exports are cheaper — doesn't it all come out in the wash? Not necessarily. "You can't devalue your way to prosperity," says Ronald Simpson, managing director of global currency analysis for Action Economics.