12 January, 2019 - 15 January, 2019
Riva del Garda (Tn), Italy
14 January, 2019 - 17 January, 2019
Sao Paulo, Brazil
15 January, 2019 - 16 January, 2019
New York NY, U.S
17 January, 2019 - 19 January, 2019
22 January, 2019 - 25 January, 2019
It seems that as January 2015 has flashed past global shifts in currencies are creating winners and losers in every aspect of the global economy and the leather industry is at the heart of the action.
On January 25, the Greek population elected the left-wing Syriza party headed by Alexis Tsipras on an anti-austerity ticket, which has left a few uncomfortable bureaucrats in Brussels as well as in the German government wondering if the new Greek government will stick with its austerity measures following its huge bail-out after the 2008 economic crash or default.
Weak economic performance of a number of countries in the Eurozone, including Italy, Spain and Portugal has seen the value of the Euro sliding for some time now and the Greek election result is adding to the nervousness of a Greek retreat from the currency and the fall-out both economically and politically it may create.
If we turn back the clock to March 16, 2014 €1.0 would have got you US$1.39. However, the euro has consistently weakened against the dollar throughout the year to US$1.28 in October and then has fallen sharply to a low of €1.11 on January 25, the date of the Greek election. Today, it is hovering around the €1.13 level. Although this maybe bad news for tourists visiting outside the Eurozone it is a welcome boost for leather exporters as leather and leather products from countries such as Italy become more competitive. Coupled with lower raw material prices it is making businesses in the Eurozone more competitive. However, for those buying materials such as hides/skins or chemicals in U.S dollars it is not such welcome news.
To underline this, the CEO of Salvatore Ferragamo, Michele Norsa, stated positive forecasts for the fiscal year ended December 2014 this week. Advantageous exchange rates and lower raw materials prices such as leather will have a positive impact for 2015, moreover it is expected that leather goods and footwear will be the main drivers of the company’s growth this year he said.
In contrast, UK fashion house, Burberry who are based outside of the Eurozone posted good results earlier this month but cited currency fluctuations for a reduction in Q3 profits. Outgoing Burberry, CEO Angela Ahrendts warned that exchange rates could prove "a significant headwind in the second half and beyond".
Australian dollar depreciation
Outside of Europe, the Russian rouble has nose-dived following economic sanctions and the Australian dollar has also significantly weakened against the U.S dollar in recent months. This was highlighted by tanner, Packer Leather in a story posted on the ILM website on January 26 following an article in the local press. Packer Leather, a major export led leather maker, welcomed the weakening of the Aussie dollar which stood US$1.0 to A$1.07 at the end of August 2014 and has consistently depreciated to its current level of US$1.0 today for A$1.29. With an abundance of raw materials this is good news for exporting Australian tanners and traders alike.
Falling off a cliff
Coming back to Europe, the Swiss government announced in mid January that it was no longer going to peg the Swiss franc to the euro. On January 15, €1.0 was worth CHF1.20 a day later once the news leaked out the euro was worth just €0.99 for CHF1.0.
TheSauerReport.com based in Geneva, reported that people from the Eurozone that held Swiss francs were forming long queues in the streets to cash-in on the bonanza and make a 20% mark-up overnight! Not such great news for Swiss companies such as hide traders when their products became 20% more expensive overnight selling into the rest of the Eurozone!
ILM Currency Exchange Service
The examples above highlight the need to keep in touch with foreign currency markets as it may have a positive or negative impact of the financial performance of any business.
In the next few days, ILM together with foreign exchange specialists, Moneycorp will be launching a currency exchange service on this website. This will allow ILM readers access to live currency markets from around the world while you catch-up with the latest industry news and technology.
Further announcements will be made when the new online service is live.
Martin Ricker, Content Director, International Leather Maker