The fashion sector is facing the prospect of massive price hikes following the collapse of sterling against the dollar.
Retailers and suppliers fear that spring 09 prices will be forced up by more than 6% after the pound weakened against both the dollar and the euro this week. The dollar strengthened to $1.79 against sterling on Monday.
Most retailers and suppliers buy their goods in US dollars, particularly from sourcing bases in the Far East. However, the extent of the possible price hikes is unclear as most major multiple retailers and suppliers forward buy currency to lock in margins and manage cashflow, meaning the effect of currency fluctuations may not be felt for some time.
One company executive told The Times newspaper, "The dollar could have a big impact, but it will all be about how well you're hedged. If you've only got a short hedge in place, then it could be a big problem."
Meanwhile, the weakening of the pound could provide a boost to British brands looking to export their fashions. A weak pound means that their goods will be more attractive to overseas buyers.
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