Price-wise, retail apparel prices decreased month-on-month in May, falling 0.9 per cent. Year over year, retail apparel prices were 1.2 per cent lower, Cotton Incorporated said in its latest Executive Cotton Update on ‘U.S. Macroeconomic Indicators & the Cotton Supply Chain’.
After being virtually unchanged in the first four months of the year, seasonally-adjusted prices per square metre (SME) of cotton-dominant apparel imports edged slightly higher in May (+$0.03/SME). Nonetheless, average sourcing costs remain near the lowest levels recorded outside of the 2008/09 recession, the report said.
Giving a macroeconomic overview, the report mentions that the US dollar has fallen 4 per cent against a broad collection of widely circulated currencies since January 2017. “While the magnitude of the decline may not appear large, it does signal an important reversal relative to recent years. Against the same broad collection of currencies, the US dollar had consistently strengthened since 2013, rising more than 25 per cent over the past four years before turning lower in recent months,” the report states.
Noting that relative interest rates are a factor that can affect exchange rates, the report points out that recent announcements from central banks around the world have affected interest rates. Another factor that can affect exchange rates are expectations relative to economic growth. In recent years, economic growth in the US has been more robust than it has been in many other developed economies, and demand for the dollar may have been supported by greater confidence in the US economic outlook. That situation is evolving.
In the globalised economy, exchange rates have a range of effects. For trade conducted in US dollars, a stronger dollar is often associated with lower price levels. The strengthening of the dollar in recent years has been a factor helping to pull costs of imported apparel lower. That influence may unwind if the dollar continues to lose ground. In many commodity markets, oversupply has outweighed currency-related influences. NY cotton has declined about 10 per cent since January. (RKS)
Fibre2Fashion News Desk – India
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