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Currency Fluctuations: Silver Cloud, Dark Lining

Currency fluctuations could be one bright spot on the horizon for European beauty brands, which have suffered in recent years.

Currency fluctuations could be one bright spot on the horizon for European beauty brands, which have suffered in recent years because of the euro’s strength against the dollar.

“The dollar is in good health, so that will help European manufacturers,” said Fabio Franchina, president of Unipro, the Italian association of cosmetics companies.

“From a competition point of view, [the dollar-euro exchange] makes U.S. companies less of a threat,” said Eva Quiroga, an analyst at UBS. (As of Thursday, one euro equalled $1.29).

“It was a headache when it was at $1.60,” said Gerard Delcour, president of Groupe Clarins’ international division. “Today’s situation is more normal, but who knows how long that will last?”

Remy Gomez, president of Beauté Prestige International, a division of Shiseido, noted that a softening pound will likely hurt brands with strong travel-retail businesses because the U.K. represents a sizable chunk of that market. He was equally skeptical about counting on currency movements.

“If you have to resort to depending on exchange rates, you’re in a bad situation as you’re relying on things you can’t control,” he said.