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SAO PAULO, Brazil — Antique-store owners in lower Manhattan, ticket vendors at the Taj Mahal in India and business executives in Brazil who are heading to China all have something in common these days: They don’t want U.S. dollars.

Hit by a free fall with no end in sight, the once mighty U.S. dollar no longer is crashing only on currency markets and making life more expensive for American tourists and business people abroad: Its clout is evaporating worldwide as foreign businesses and individuals turn to other currencies.

Experts say the U.S. economic forecast is bleak, meaning it will take years for the greenback to recover its value and prestige.

Negative dollar sentiment is growing in nations where the dollar historically was accepted as equal to or better than local currency. The aversion to dollars even extends to some quarters in the United States.
At the Taj Mahal, dollars were always legal tender, alongside rupees, for entry into the palace. But because of the falling value of the dollar, the government implemented a rupees-only policy a month ago. Indian merchants catering to tourists also have turned bearish on the dollar.

"Gone are the days when we used to run after dollars, holding onto them for rainy days," said Vijay Narain, a tour operator in the city of Agra, where the Taj Mahal is located. "Now we prefer the euro. It gives us more riches."

In Bolivia, billboards feature George Washington’s image on a $1 bill alongside a bright pink 500-euro note, encouraging savers to turn to the euro to tuck away money earned abroad or sent home in remittances.

"If the dollar’s going down … save it in Euros!!!" say the signs popping up around La Paz for Bolivia’s Banco Bisa.

And in neighboring Brazil, the Confidence Cambio money-changing service was the first to start offering yuan so travelers to China no longer have to change the money into

dollars first. The service is already a hit because Brazil does big business with China, and lots of Brazilians are heading to the Olympics this summer.

"Now we tell people not to take dollars when they go abroad, it’s better to change it directly to the local currency," said Fabio Agostinho, one of the firm’s managing partners. "If people leave here with dollars and go abroad, they lose when they exchange them. It’s the same thing whether they’re heading to China, Europe or even Argentina."

In Manhattan’s Bowery district, Billy LeRoy, the owner of Billy’s Antiques & Props, prefers payment in euros so he can stockpile the currency for his annual antique buying trip to Paris.

"Whip out dollars at the French flea market now, and they’ll shoo you away," he said.

The dollar has steadily eroded in value against the euro and other currencies since 2002 as U.S. budget and trade deficits ballooned, but fears of an American recession and credit crisis have sent the dollar to stunning lows amid predictions the slump will continue for a long time.

The euro, which rose to record highs last week, was trading for $1.5670 late Friday, while the dollar on Thursday dropped below 100 Japanese yen for the first time since November 1995. Late Friday, it was trading at 99.11 yen. The dollar also recently hit a 10-year low against the Chilean peso, and fell to its lowest level against Brazil’s real since the nation floated its currency in 1999 free credit reports.

CYCLE HARD TO PREDICT

While low-dollar cycles have come and gone for decades, experts caution that it’s now much more difficult to predict when this one will end because the euro didn’t exist as competition for the dollar before.

During previous U.S. economic downturns, big foreign funds typically snapped up U.S. treasuries, helping to shore up the dollar to a certain degree. But the euro and currencies from other nations are now seen as legitimate options, and interest rates are higher outside the United States — meaning the funds can get better returns on investments elsewhere.

"You have the U.S. still holding this trade deficit, but now you have the possibility of a U.S.-led recession, and you have a weakening currency. So it’s a very dark outlook for the dollar," said Gareth Sylvester, senior currency strategist with the British firm HIFX, which executed $40 billion in currency trades last year.

Nations that were once seen as incredibly risky for investments — such as Brazil — are now seen as good long-term bets. And countries such as China and Russia, with burgeoning coffers of money to invest abroad, are thought to be shifting some of their reserves or diversifying fresh income to destinations and currencies outside the United States.

LOOKING FOR YIELD

It used to be important for most countries "to accumulate dollars as a precautionary element against rainy days, but the accumulation of reserves has become so large in most emerging-market countries that the balance is way beyond what’s needed for precautionary reasons," said Eliot Kalter, a fellow at Tufts University’s Fletcher School of Law and Diplomacy and a former International Monetary Fund official.

While most experts believe the dollar eventually will regain strength, no one is willing to predict when that will happen.

"I think the factors that are affecting the weakness of the dollar will be reversed, but no time soon," Kalter said.

The problem now is that "people just don’t want to be holding U.S dollars and U.S.-based equities," Sylvester added. "If you are an investor with $1 million to invest, you look for the highest yield — you’re looking at South Africa, Australia, New Zealand."

And it’s not only the big time investors that are looking for other options.

In Peru, where savings in U.S. dollars were long a popular hedge against inflation, many citizens are closing dollar accounts in favor of Peruvian soles.

At the same time, businesses such as supermarkets, movie theaters and cable TV companies that used to accept dollars are now demanding soles.

Edwin Figueroa, a 29-year-old systems engineer, switched his checking account from dollars to soles seven months ago as the dollar’s decline started worrying him. He doesn’t think he’ll be going back anytime soon.

The Peruvian sol "is stable now," he said. "And maybe in a year, the dollar will even go lower."

Biswajeet Banerjee and Leslie Josephs of The Associated Press contributed to this story from Lucknow, India, and Lima, Peru.

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