Strong Peso Hurts Colombia's Textile Industry

morphus says on May 27, 2008, 06:08:

Colombia's textiles and apparel industry has lost COP1bn (US$0.56m) in the four years from 2004-2008, hurt by a soaring peso, growing contraband rates and tougher Asian competition.
The country's industry, which has also lost 24,000 jobs in the period, is struggling to survive as a strengthening peso dampens exports and a falling US dollar fuels imports of Asian apparel.
A flourishing contraband trade is also hurting the industry's fortunes, observers say.
In the first quarter, leading textile producer Fabricato lost COP17m while rival Enka saw revenues fall to COP97m from COP120m in the same 2007 period, according to analysts.
Other industry leader Coltejer is on the brink of bankruptcy and seeking a buyer. Its shares stopped trading on the stock exchange ten days ago.
"It has been a very difficult quarter," Ivan Amaya, president of textiles lobby Ascoltex, said in a statement.
"A cheap dollar has allowed a grater number of Asian imports to arrive, robbing our market share. We are reaching a very critical situation."
The industry is set to hold a series of meetings with the government to hammer out a rescue plan for the 600,000-strong sector which may include tax incentives and other protectionist measures.

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bickerss says on May 27, 2008, 07:56:

Maybe the dollar will go through a short term rally (according to J Rogers via an international living article)



''''Money just keeps pouring in as the demand for Brazil’s bonds, stocks, and commodities continues to pump money into their economy.

So what will Brazil do with all this new found money? Brazil’s reserves have already doubled since 2006 to a whopping $195 billion. Not bad for a country that had trouble paying its debts just a few years ago.

Brazil’s policymakers have considered many options lately. Rather than touch their $195 billion in reserves, they have decided to start a $20 billion Sovereign Wealth Fund (SWF). This new SWF would take this new-found wealth and diversify it into many different investments.

What’s the plan now? First, Brazil’s policymakers will use the proceeds from the recent bond sale to pay off more expensive debts. Then they’re planning to build their Sovereign Wealth Fund. They’ve already announced they’re investing at least part of that $20 billion in U.S. dollars.

Brazil’s policymakers are also planning to use part of this money to buy rivals overseas, fixed income assets, and finance companies seeking to invest in their operations.

Brazil is becoming more solid all the time. And as they diversify their income streams, Brazil’s leaders will just create a brighter, more stable future for themselves.

I find it interesting that they feel buying dollars at this point in time is a worthwhile investment. You only buy things because you think they will go up in value...as far as investments are concerned.

Even the epic dollar bear Jim Rogers agrees there could be a short-term dollar rally. He estimates that it may only last about a year. He’s going to use that dollar rally to finally exit his dollar denominated assets.

He also stated another reason why the U.S. dollar may rally for about a year: America is a huge agriculture producer. The world is in dire need of agricultural commodities, so our American farmers are going to pick up the slack where the economy has fallen.

So in the near term you can see that both Brazil and Jim Rogers are betting on the greenback.

Now in the longer run, Rogers believes the commodity dollars (Australian dollar, New Zealand dollar, and the Canadian dollar) will do better than those that aren’t commodity exporters during this commodities boom. In fact, he especially emphasized his Aussie dollar position (and since Brazil is also a “commodity currency,� I believe it will prosper right along with these others that Rogers has listed).

So don’t get me wrong, over the years, the dollar will have problems. But in the next few months, there's money to be made by investing in dollars and Brazil knows it.

Sean Hyman
For International Living


'''

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dogfart says on May 27, 2008, 10:20:

The low exchange rate hurts my income as well !!

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miamimike says on May 27, 2008, 13:24:

It will hurt Colombia's Cut Flower industry as well, also the Coffee export trade.

"Wait a minute. What did you just say? You're predicting $4-a-gallon gas? That's interesting. I hadn't heard that." -- Feb. 28, 2008 --George W. Bush, Washington, D.C.

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panthdave says on May 27, 2008, 16:30:

I can vouch for that Miamimike our floral dept which purchases many flowers for events are coming from Ecuador and use to be mostly Colombia but now mostly Ecuador boxes...

panthdave Miami

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miamimike says on May 27, 2008, 17:56:

PD--Wait 'til the Chinese Cut Flowers Exports hit Miami, NYC and the rest of the USA...

"Wait a minute. What did you just say? You're predicting $4-a-gallon gas? That's interesting. I hadn't heard that." -- Feb. 28, 2008 --George W. Bush, Washington, D.C.

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Tinto (Moderator) says on May 27, 2008, 18:10:

I don't think the Colombian coffee export business is taking a big hit.

TODAY
$1.35 USD per pound prevailing market price x 1800 COP/USD = 2430 pesos received per pound

A COUPLE OF YEARS AGO
$0.90 USD per pound prevailing market price x 2500 COP/USD = 2250 pesos received per pound

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BillBigD says on May 27, 2008, 19:10:

The Chile Peso hit 4 month low on lower demand for goods. Could be a sign of things to come.

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miamimike says on May 27, 2008, 20:26:

Talk to the Miami Importers in Person Tinto,,,They have a different opinion,,,

"Wait a minute. What did you just say? You're predicting $4-a-gallon gas? That's interesting. I hadn't heard that." -- Feb. 28, 2008 --George W. Bush, Washington, D.C.

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