Like the billionaire investors Warren Buffett and Bill Gross, Bündchen, the Brazilian supermodel said by Forbes magazine to earn more than anyone else in her industry, is at the top of a growing list of rich people who have concluded that the currency can only depreciate because Americans are living beyond their means.
When Bündchen, 27, signed a contract in August to represent Pantene hair products for Procter & Gamble, she demanded payment in euros, according to Veja, the biggest weekly magazine in Brazil. She will also get euros for the deal she reached last October with Dolce & Gabbana to promote the fragrance The One, Veja reported.
“Contracts starting now are more attractive in euros because we don’t know what will happen to the dollar,” Patrícia Bündchen, the model’s twin sister and manager, said in September. She declined to discuss details of the arrangements last week, as did Anne Nelson, Bündchen’s agent at IMG Models in New York.
The dollar has fallen 34 percent since 2001, but traders and forecasters say it will weaken even more as U.S. home sales fall and the Federal Reserve cuts interest rates. The dollar plummeted to its lowest level ever last week against the euro, the Canadian dollar and the Chinese yuan and was at the lowest level in 26 years against the pound.
The dollar is falling as investors seek better returns outside the United States.
“We’ve told all of our clients that if you only had one idea, one investment, it would be to buy an investment in a nondollar currency,” said Gross, the chief investment officer of Pacific Investment Management in Newport Beach, California, and manager of the world’s biggest bond fund.
Hans-Günter Redeker, chief currency strategist for BNP Paribas and the most accurate foreign-exchange forecaster in the past quarter in a Bloomberg survey, said the euro might climb to $1.50 by the end of the year from about $1.45 now. The median estimate of 42 strategists surveyed by Bloomberg is for the currency to end the year at $1.43. Among those surveyed last week, the forecast ranges from $1.42 to $1.50.
Analysts in a Bloomberg survey expect the dollar to strengthen in coming months as stronger-than-forecast reports suggest U.S. consumers will keep the economy out of recession. Payrolls grew by 166,000 in October, double the median forecast of economists in a Bloomberg survey.
The euro will fall to $1.35 by the end of 2008, according to the median estimate in the survey.
“So far the data has shown the U.S. economy may not be slowing to the extent the majority of the market had expected,” said Omer Esiner, an analyst at the currency trading company Ruesch International in Washington who said he expected the euro to fall as far as $1.38. “That could temper policy easing down the road and lend support for the dollar.”
Buffett, whom Forbes in April ranked as the world’s third-richest person behind Bill Gates and Carlos Slim Helú, told reporters in South Korea last month that he was bearish on the U.S. currency.
“We still are negative on the dollar relative to most major currencies, so we bought stocks in companies that earn their money in other currencies,” said Buffett, who is chairman of Berkshire Hathaway.
Jim Rogers, a former partner of George Soros and chairman of Beeland Interests, said last month that he was selling his house and all his possessions in the U.S. currency to buy the yuan.
“The dollar is collapsing,” Rogers said last week. “I’m moving to Asia because moving to Asia now is like moving to New York in 1907 or London in 1807. It’s the wave of the future.” -
Bloomberg News
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