While the dollar’s 20.7 percent slide in value against the euro over the past year has attracted a lot of attention, it hasn’t lost that much ground compared with foreign currencies.
Among the nations that were the top 10 suppliers of imported textiles and apparel to the U.S. last year, the changes have been smaller. The dollar’s deepest slide was a 10.6 percent depreciation versus the Canadian dollar. At the other end of the spectrum, it gained 6.7 percent against the Mexican peso. The Chinese yuan is essentially pegged to the dollar, and the fluctuations between the two currencies are minimal.
Most importers further cushion themselves from these shifts by writing their sourcing contracts in dollars. In turn, the garment contractors from which they buy tend to pay dollars for fabric and other materials, paying only local expenses like wages in their national currencies. Nonetheless, when the dollar declines in value against the currency of other nations, suppliers in that country feel a pinch in margins.