Corporate America worried about sinking dollar

CARY, North Carolina (Reuters) - Chief executives from the biggest U.S. corporations worry that the slumping dollar could sap U.S. credibility around the globe, spur inflation and ultimately undermine the economy.

U.S. dollar bills are displayed in Toronto March 26, 2008. REUTERS/Mark Blinch

The dollar has fallen to a 14-month low; and while a weaker dollar makes U.S. products cheaper overseas, chief executives gathered for the Business Council meeting in Cary, North Carolina, expressed deep concern that the anemic dollar signals serious jitters.

"The issue is currency devaluation, and the worry is that it essentially lowers our credibility in the world," said Office Depot Inc ODP.N CEO Steve Odland in an interview with Reuters on the sidelines of the conference.

CEOs say that a slew of government spending programs on health care and other priorities could undercut economic recovery.

As the Federal Reserve works is effectively “printing money” through various programs to restart stalled financial markets, inflation is a risk.

"I have very significant concerns that unless we modify the current (spending) strategy, we will see inflation and a further reduction of the dollar," said PG&E Corp PCG.N CEO Peter Darbee.

“The current move in the dollar is an early indication that others in the world expect the same thing. That’s why there’s a beginning of the movement away from the dollar as a store of value.”

“We need to return to fiscal responsibility,” added Office Depot’s Odland.

The greenback has been under broad selling pressure on expectations that U.S. interest rates will stay at very low levels for some time. Low rates reduce the attractiveness of U.S. investments and ease demand for the dollars to buy them.

Still, some corporate chieftains don’t deny that a weaker dollar can be quite beneficial.

“The biggest benefit to our business is the weaker dollar,” said James Goodnight, chief executive officer of the business analytics software maker SAS.

Because SAS reaps about 65 percent of its revenue outside the United States, the dollar’s drop against the euro has helped boost profit, he said.

“For every 100 euros (of product) we sell in Europe, we get back $150,” said Goodnight.”

But overall, many CEOs said they were worried about the long-term impact of a weak dollar.

"Long term, the economic welfare of the country relies a stronger dollar," said Norfolk Southern Corp NSC.N CEO Wick Moorman. "While shorter-term weakness may accomplish certain things, it's not a good long term monetary policy."

Additional reporting by Chris Sanders in New York, editing by Gerald E. McCormick