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Flower Firms Bank on Euro to Rebound

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Tuesday, 26 October 2010

Flower Firms Bank on Euro to Rebound

The hardening of the euro against the US dollar has raised expectations among cut flower exporters who were bracing for income knocks following a reduction in airlifted volumes. A resurgent euro coupled with a weak shilling provides room for significant gains by exporters. "We are hoping to recoup losses since the year has been quite tough for us," said Ms Jane Ngige, the CEO of Kenya Flower Council. The dollar has plunged from a peak of 1.294 against the euro in the last two months to a 10-month low of 1.398. The shilling is trading at 112 against the euro, the lowest level since 2004.

Exports dropped
That means exporters will get more money in shilling terms for their produce, which is paid for in euros, even when the earnings are converted to dollars."The euro rose against the dollar on speculation that the US government will debase the greenback by increasing purchases of government debt," reported the Bloomberg. More than 80 per cent of horticulture exports are sold to European markets and are paid for in euros.