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Currency Stability Among Major Suppliers Could Be Tenuous

There’s nothing sourcing executives like less than uncertainty, so in that regard, the relative lack of currency volatility among major supplier countries has been helpful.

However, economists suggest that political turmoil lies right on the surface, from the U.S. to the U.K. to China, so stability could be fleeting.

The dollar’s relative strength has experts predicting a Federal Reserve interest rate rise on the horizon, signaling currency rate wobbling down the road.

Among major economies, the euro was trading at $1.27 on Tuesday, down slightly from its 52-week high of $1.14, while the dollar was worth 109.27 Japanese yen, in the mid-range of its 12-month average. The Australian dollar was trading at 75 cents, in the middle of its yearly exchange rate average, while the Canadian dollar was at $1.34, just off its 52-week peak of $1.37.

One British pound was getting $1.29, just above its 52-week low of $1.20. The value of the pound has been depressed over Brexit and terrorist concerns impacting spending and tourism, and Wednesday’s election could bring more fluctuation. The Chinese yuan has been trading higher against the pound, with the pound trading for 8.77 yuan on Tuesday, down from 9.8 yuan about a year ago.

The World Bank’s just released “2017 Global Economic Prospects” report said, “Amid exceptionally low financial market volatility, a sudden market reassessment of policy-related risks or of the pace of advanced-economy monetary policy normalization could provoke financial turbulence.”

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The report highlights concern about mounting debt and deficits among emerging market and developing economies, raising the prospect that an abrupt rise in interest rates or tougher borrowing conditions might be damaging.

Looking at major U.S. apparel and textile suppliers, the dollar was trading at 6.8 yuan, down from nearly 7 yuan just as President Trump was taking office.

The Cambodian real continued a long-term flat trajectory of 4,066 to the dollar, as did the Indian rupee at about 64.43, the Pakistani rupee at 104.83 and the Vietnamese dong at 22,722.50. The Bangladeshi taka was trading at 80.59 to the dollar, down from a peak of 84.24 in April.

Mexico’s peso currency turned positive late on Sunday after election authorities projected a narrow win in a gubernatorial vote in the country’s biggest state for the ruling party of President Enrique Pena Nieto.

The peso firmed to trade at 18.63 pesos per dollar, up 0.3 percent, after losing ground earlier on Sunday when the election for governor in the State of Mexico appeared to be too close to call. On Tuesday, the peso was trading at 18.27 to the dollar.