Euro Envy

Euro Envy
By Peter Hyman

East Village Wines, on First Avenue between St. Marks Place and Ninth Street, is the type of place where the co-owner inquires about his customer’s “sweethearts” and runs product giveaway contests for the most original palindrome. The store has been a fixture since the early 1960s, long before the neighborhood became a haven for iPod-laden hipsters and overpriced walk-up studios. But as the East Village has become more gentrified, so to have East Village Wines’ fiscal policies. To keep pace with a globetrotting clientele, the store accepts and exchanges Euros, the currency that unites the 12 nations of the European Union and is currently slapping the dollar silly.

The store’s Euro guidelines were initiated by co-owner and currency buff Bob Chu three years ago, when the Euro debuted in paper form (it has existed as an electronic trading device since 1999). “We’re not a bank,” said Chu, a stocky Chinese-American with salt-and-pepper hair and a thick Bronx accent. “It’s just a friendly bartering system. But you gotta take care of your customers.”

The store does not advertise this practice, though most of the regulars know of the arrangement. For those who are not aware, a small chalkboard near the cash register states the offering as well as the novel rate of exchange with matter-of-fact clarity: One U.S. dollar for every one Euro.

Customers traveling to Europe can thus convert enough pocket money to get them to their initial destinations at a tidy profit, compared to rates given at a bank or airport kiosk (the current exchange rate is $1.30 for every one Euro). Those returning from abroad can put the Euros they inevitably bring back toward a robust potable instead of tossing them into a drawer, though with the one-to-one rate doing so does cost a premium. Many, however, seem undeterred by this: The store’s yearly Euro take exceeds €30,000.

“By the time you add the bank’s commission and the hassle of waiting in line, converting Euros back to dollars is not worth it,” said a corporate lawyer for a large financial services institution who visits Europe five times a year and is a frequent Euro spender at the store, and who wished to remain anonymous. “And besides, if I don’t use them here, I’ll stash them away and forget where they are.”

On a recent visit to East Village Wines she had Euros left over from a holiday to Greece. She decided to use the overage to fund the acquisition of two bottles of organic wine—a 2002 Bordeaux and a 1999 Cabernet Sauvignon from Washington state.

The blonde thirtysomething, dressed in blue jeans, a black nylon coat trimmed with fur, and a grey Cossack hat, carried her selections to the front of the store. After a few minutes of small talk with the friendly clerks, she placed a wrinkled fifty Euro note on the Formica countertop.

“The total comes to $30.39, with tax,” said co-owner Tom Chu, Bob’s older brother, as he nonchalantly took the currency, bagged the bottles and handed over her change, in U.S. dollars.

While most of East Village Wines’ Euro transactions go as smoothly, the Chus do see their share of hagglers. In fact, they recently set an unofficial €100 limit on purchases in an effort to deter customers inclined to protracted rate negotiations.

“They’re not buying a house here,” Bob Chu said. “It’s only wine.”

Accepting a wider range of currencies also increases the store’s exposure to potential fraud. So far, however, only one person has attempted to pass a counterfeit Euro note. The eagle-eyed Bob Chu spotted the forged fifty, questioning its authenticity but deciding not to report the man to the authorities.

Not that the brothers Chu have any reason to worry. According to the U.S. Department of Treasury, East Village Wines’ currency activities are perfectly legal. Foreign exchange–“FX” in the vernacular of Wall Street—is one of the least regulated market activities, and there are no laws prohibiting a merchant from exchanging Euros (or, for that matter, British Pounds, Japanese Yen or Mongolian Tugriks). In terms of sales, “a retailer can accept paper clips for a good or service he provides, if he so chooses,” said a Treasury spokesman.

Given the dollar’s current status, paper clips might be an attractive alternative for Americans shopping overseas. For East Village Wines, the weak dollar has increased the frequency of Euro transactions and the overall gross value of their Euro-based take. “We’ve seen a bump in Euro activity, for sure,” said Bob Chu. “But whatever we’re making, we’re giving back on the other end.” Most of the store’s suppliers are Europeans who demand to be paid in dollars, so import costs have increased by more than 25% since the dollar began its downward slide, in the last quarter of 2004. In the currency game, sometimes a player cannot win for losing, no matter how a nice a guy he is.

Peter Hyman’s first book, The Reluctant Metrosexual: Dispatches from an Almost Hip Life, was published in August by Villard.

Copyright, 2005, The New York Observer