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Depreciating euro to impact clothing purchase of European buyers

The average price of EU textile and clothing imports jumped 14.2 per cent during the first four months of 2015, predicts Textile Outlook International. It is expected to continue to rise in 2015 and 2016. The jump in average import price during the four-month period resulted from a sharp 18.9 per cent depreciation in the value of the euro against the US dollar and despite a softening of raw material prices in the second half of 2014.

The sharp depreciation of the euro against US dollar made EU imports expensive in euro terms. And importers, who had to pay substantially more for textiles and clothing, responded by cutting volume of textile imports by 0.6 per cent and clothing imports by 3.7 per cent. While these deductions appear relatively small, full impact of currency movements is yet to be felt as many of the orders fulfilled in the first four months of 2015 were placed before the euro depreciated.

In clothing alone, the average price of EU imports shot up by 17.8 per cent during the first four months of 2015. Interestingly, among the EU's 10 leading clothing supplying countries, the fastest price increases were seen in case of imports from those which supplied clothing to the EU at the lowest average prices. This suggests, suppliers in these countries had such tight margins that they were unable to absorb the effect of the depreciation of the euro against the US dollar and were therefore forced to pass on the increases in prices in euro terms to buyers. 

In 2015, the euro is forecast to depreciate against the US dollar by 21.3 per cent. Furthermore, in 2016 it is expected to depreciate by a further 5 per cent to its weakest level since 2002. Textile and clothing import prices in euro terms are therefore expected to continue to increase, even if they fall in US dollar terms. As a result, experts point out that, European buyers may cut back on their purchases in 2015 and EU imports of textiles and clothing may fall in volume terms.

www.textileintelligence.com

 

 
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