1 dollar equivalent to 1 euro: The impact on European luxury fashion brands

Last week, one euro was exchanged for one dollar for the first time in 20 years. The instability caused by the Russian-Ukraine war is causing many of the world’s economies to take a severe hit.

As alternatives to Russian oil and gas are being sought, the value of the euro has declined to more than five percent against the dollar.

The United States, on the other hand, is aiming to boost the value of its currency to keep inflation at bay. The US Federal Reserve is doing this by increasing its interest rates and tightening monetary policy.

What does this mean for the world of luxury fashion?

Every fashion enthusiast knows that luxury brands are domiciled in Europe, what this meant was that many tourists rushed into these stores and bought items they’ve always wanted as if it was on sale - and in a way, it was!

These luxury brands have experienced a decline in stock value with the war and Covid-19 restricting sales. LVMH, the holding company of brands like Dior, Sephora, Bulgari, Louis Vuitton and many more stock fell by 20 per cent.

Kering, a holding company for brands like Gucci, Saint Laurent, Bottega Veneta, Balenciaga, and Alexander McQueen stock also declined by 30%.

The possible projection with the devaluation of the euro is a possible hike in the price of luxury goods.

However, in the meantime, American tourists and people with the American dollars are having a great time shopping in Europe.