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The euro is at near parity against the US dollar, what this means for luxury fashion

By Don-Alvin Adegeest


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Image: The Luxury Closet

On the day that the euro announced Croatia would be the 20th country joining the currency, its value slid to near parity with the dollar.

While analysts are speculating how low the euro can go, it is the first time in its 20-year history that the dollar is nearly even, with the euro having lost more than 10 percent of its value since the start of 2022.

While for European consumers visiting the US or importing goods from the States will become very expensive, the news will not be bad for everyone, especially for the luxury goods sector and those exporting.

A boost to the bottom line

Exports to the US will be cheaper and the world’s luxury houses, most of which are European, will see a boost on the bottom line, especially those that operate US retail.

While most goods are sold at a dollar value that balances fluctuation and is set in advance, prices are rarely adjusted to be cheaper if the currency of origin falls.

Travel retail may also see a boost as American spending in Europe will see customers able to buy more goods for their dollar, especially if these goods are cheaper than what they would cost back home.

Tax free shopping will also see a boost as buying luxury goods in France and Italy could save American shoppers between 20 and 30 percent on items such as Louis Vuitton and Chanel handbags.

Paris haute couture and men’s fashion week saw a surge in American attendees who had not travelled in over two years and US guests of the houses filled up the front rows.

As the war in Ukraine threatens to cut off Europe’s gas and energy supplies, the fall of the euro may not have yet hit rock bottom. Ultimately high inflation will not be positive for countries on either side of the Atlantic, but for now luxury companies will see an uptick in the margins of their US exports and local retail.