What a Strong Dollar Means for Frieze London and Paris+
Over the past several weeks, much has been written in the American press about the ongoing strength of the U.S. Dollar relative to the British Pound and the Euro, though as of Tuesday they are trading at $1 to £0.90 and $1 to €1.03, respectively.
In the run-up to Frieze London this week and Paris+, par Art Basel next week, there’s been much discussion within the art world about how this might impact the upcoming fairs as well as the October auctions in London later this month, with with some saying that while the currency situation may have a direct impact, other factors will also play a role in either fair’s success
Joe Charalambous, president of TPC Art Finance, which focuses on providing loans to collectors with their art holdings serving as collateral, told ARTnews that clients he spoke to are definitely “paying a keen eye” to art market events unfolding this month, though he noted that’s it’s always difficult to accurately predict what will actually happen in advance.
“I think you’re going to see a lot of collectors—American or not—who possess U.S. dollars and are looking to buy art see an opportunity to possibly get a good deal,” he said. “I think a lot of people have that on their mind.”
Thaddaeus Ropac, whose eponymous gallery has locations in London, Paris, Seoul, and Salzburg, told ARTnews, “There are always fluctuations in currencies, and collectors can think of this as an incentive to buy. So, I think American collectors will be the big spenders this fall, and I think European collectors will be more cautious.”
Paris-based dealer Kamel Mennour added, “It’s a prophecy—you’ll never know what will happen. From week to week, it’s another religion. No one knows—it’s day to day. The main problem now is not a question of currency but a question of inventory—having the best works possible.”
“Just from a technical standpoint, there is a currency advantage for U.S.-dollar buyers buying in euros and pounds,” Joshua Greenberg, a private client advisor and managing director at Bank of America Private Bank, who works with several clients who are also collectors, told ARTnews. “I do think it’s a little bit too early to tell what the impact is going to be because art is not valued as frequently as other financial assets. This move has happened more recently, or at least in the last year, but obviously it is a financial advantage.”
Other dealers pointed out that fluctuating currencies have been on people’s mind since earlier this year, and that an influx of American collectors to London and Paris might be a bit overblown. Massimo De Carlo, who has spaces in Milan, Hong Kong, and new location in London that opened this week, told ARTnews that even as signs of a strengthening dollar became noticeable in the summer that didn’t seem to impact American attendance at Art Basel in Switzerland in June.
“When this trend was already on the rise, the participation of American collectors at Basel 2022 was the same or just a bit less” than years prior. He added, “It didn’t really change our business at the fair.”
Ropac said he observed a similar situation happen during Frieze Seoul at the beginning of September: “It was already a topic in Seoul because the Korean Won also got hit by this exchange.”
While some dealers said that the currency situation ahead of Frieze London and Paris+ is worth discussing, there are other macro factors that will impact the success of the fairs and the fall auctions.
Drew Watson, senior vice president and head of art services at Bank of America, told ARTnews that in addition to typical art-market factors like long waiting-lists for in-demand artists on the primary market and the recent announcements of major single-owner sales like that of Paul Allen’s billion-dollar collection heading to Christie’s, it is worth looking at inflation, rising costs related to logistics and storage, higher interest rates in the US (which could push high net-worth individuals to buy art over real estate), a certain level of volatility in financial markets, and a stronger purchasing power of the US dollar.
“It’s still a bit too early to see how it’ll all play out, but if you look at how all the broader macro trends are aligning, I think one could be cautiously optimistic about robust sales over the next few months,” Watson said.
“If you look at the art market on the global scale—in our case we have gallery locations in several countries and work with very international collectors—the weakness of one market is often balanced with the strength of other one,” Ropac said. “You never can tell what exactly will happen, but you can trust that if it’s complicated in one place, you’ll get support from another side. This is really globalization.”
While there has been some talk lately about whether or not galleries will be pivoting their selling strategies for the two fairs, including changing their price lists to dollars, many dealers said that they would in fact be continuing with their proven methods.
“We’re not going to change our strategy or who we show because of the dollar versus pound,” Mary Sabbatino, vice president and partner of Galerie Lelong & Co., told ARTnews. “Sometimes it goes your way, sometimes it goes against you. It’s very hard to predict. We haven’t made changes to the artists we’re showing or how we quote prices. If we pay the artist in euros, we’re quoting euros; if we’re paying the artist in dollars, we’re quoting dollars.”
Additionally, dealers noted that there are other important situations within Europe that could also impact what will happen in the coming weeks, like the ongoing war between Russia and the Ukraine, the effects of which are felt more acutely there than in the US. “It’s not distant at all,” Sabbatino said. “There’s a stronger sense that war is near. If there are any unfortunate, big developments, I’m sure that will have an impact, but if it remains stable, I think it will be successful.”
Added De Carlo, “We should be worried more about the energy crisis more than dollar-euro or dollar-pound exchange.”
Another factor in these conversations is that the ease in international travel restrictions between the US and Europe and the UK has led to an overall atmosphere that now is as good a time as any to head abroad to see art.
“Last year at Frieze, it felt like the audience was completely European with a few stalwart collectors from the US,” Sabbatino said. “I’m getting the feeling there’s going to be a lot more traveling, but I wouldn’t attribute that to the dollar versus European currencies. Rather people feel safer now to travel.”
And, when it comes to Paris+, there is just a general sense of excitement that a new fair is launching there, which has imbued the city’s art scene, ascendant for the past several years, with even more draw for visitors.
“I think Paris+ is going to be real addition to the global art-fair scene,” Sabbatino said. “FIAC was always very attractive to people because it was in Paris. Paris+ feels like an international art fair in Paris, rather than a Parisian art fair. There’s a slight difference. I expect it to be very successful.”
Added Mennour, “Paris is the place to be. I started my business here 20 years ago and it was a totally a hidden place. People spoke about it in the past: Paris was. Now, it’s an alive city.”
And once these two fairs wrap up, the next major one on the calendar will be Art Basel Miami Beach, which runs November 29 to December 3. Though many said it’s too early to say what the financial situation will look like at that time, that fair is typically already dominated by American collectors and will likely be less impacted. “The success of Miami is America, not Europe,” Ropac said.
But more than anything, many interviewed said that they are looking forward to what will actually unfold in the next two weeks. “I’m looking forward to going to London and actually seeing live if a stronger US dollar actually results in more buying,” Greenberg, the Bank of America managing director, said. “It’s hard to say ahead of time, but there’s nothing like being there and talking to your clients and the galleries that are on the floor.”
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