Currency Trends in 2004-2008 (Monthly Report) - Emerging Textiles

US Dollar, Euro, British Pound, Indian Rupee and Chinese Yuan compared with other currencies

Currency Trends in 2004-2008 Monthly Report

6 January 2009

The euro seriously rose in December, giving some room to eurozone importers while the British pound dramatically fell, therefore depressing UK's clothing import market. The decline of the dollar in December should also further limit US apparel imports in the near term. Exporters in India and Pakistan finally benefited from a sharp fall in their currencies in 2008, our statistical tables are indicating. China's renminbi no more rose since last June in addition while the Vietnamese dong seriously fell.

Radical changes were again observed on the foreign exchange market in December with dramatic consequences for the global textile and clothing trade.

First, the euro rebounded against the US dollar, being up 11% in a single month.

Euro's Rebound

The European currency actually surged in the first part of the month before declining in the last days of 2008.

The euro will have finally decreased by 4.5% against the dollar in the past year, reflecting a rise of 7.3% in the first half followed by a fall of 11% in the second semester.

Such a final rise in the euro should slightly offset the slowdown in the European clothing market.

Compared with the Euro, the Turkish lira for instance fell 21% in 2008 while the Indian and Pakistani rupees were losing 17% and 19%, respectively.

Pound's Heavy Drop

Most importantly, the British pound heavily fell in December with a loss of 5.68% against a declining US dollar and a 15% plunge vs. the euro.

Already hit by a drop in consumer sales, the UK's import market will be dramatically depressed by the recent drop in the Sterling.

Compared with the British currency, the Bangladeshi taka surged 32% in the past year while China's renminbi was up no less than 47%.

The recent weakness in the US dollar is similarly adding a new difficulty for apparel importers in the United States.

Importing from Indonesia could become very problematic after the rupiah rose 14% in December. The Indonesian currency was however down 16% in the past year against the US dollar.

Stabilizing the Renminbi

The Indian rupee fell 21% in 2008 while the Pakistani currency was down 22%, offering room for stronger competition against China.

The renminbi jumped 6.6% against the US dollar, by contrast.

Since July last year, the Chinese currency stopped rising however and the return to stability could result in a serious trade conflict between Beijing and Washington.

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