Strengthening euro attracts Finns to American online stores
Exchange rate changes reach consumers quickly owing to Internet
Consumers in Finland are benefiting from the recent weakening of the US dollar.
The cheapening of the dollar in relation to the euro is causing the prices of American products to come down from the point of view of Finnish consumers. With the same amount of euros one can now buy more stuff from across the pond than before.
The US dollar’s strengthening began towards the end of last year and reached its peak in June. On June 8th, one euro bought just 1.2 dollars. Last Friday, on the other hand, one had to pay 1.4 dollars for one euro.
Via the ever-increasing popularity of e-commerce, the exchange rate shifts are felt in consumers' housekeeping than much quicker than they once would have been. This is especially so if one buys clothes, books, or other products from American online stores.
In such stores the prices are in US dollars, so when a Finn buys a product priced in the American currency he or she will immediately reap the benefit caused by the strengthening of the euro.
In Finnish online stores and regular street outlets, on the other hand, the prices of American products do not change as quickly, because the items in the vendor’s warehouses have been purchased earlier for a higher price.
Such items have to be sold out first, before making use of the increased purchasing power of the now-buoyant euro.
Managing Director Samuli Seppälä of the Finnish Verkkokauppa.com online store is still pleased with the strengthening of the euro. “The products that we buy directly from factories are primarily priced in dollars. We are very pleased with the current weakening of the dollar.”
For example the prices of computers and mobile phones from the American manufacturer Apple will come down with a short delay.
The United States is by far the most popular foreign country for the Finns to buy their online products from.
In principle, products purchased from countries with significantly weakening currencies will eventually become cheaper even in regular high-street stores.
For example the values of the Russian rouble, the British pound, and the Chinese yuan have also dropped noticeably since June, when measured against the euro. Thailand’s baht has also weakened in recent times.
CEO Olli Yliaho from the Rahtiputki.fi online store, which specialises in products from the United States, says that the strengthening of the euro may increase purchases from the USA more from psychological rather than actual financial reasons.
“One has to take into account that the Customs fees, the value added tax and the shipment costs may increase the products' actual price notably.”
In traditional commerce the effects of the cheapening of the dollar can take their own sweet time. Managing director Simo Rosvall from AutoFennica, an importer of Dodge, Chrysler, and Jeep automobiles, explains that the purchase deals are made in euros.
Furthermore, because of the length of the period that such contracts cover, only if the exchange rate changes are more of a permanent nature will they have any real effect the next time the prices are negotiated.
As a consumer, a Finn may benefit from the strengthening of the euro, but as a worker he or she may well suffer from it.
Director Jussi Mustonen from the Confederation of Finnish Industries (EK) points out that significant appreciation of the euro will complicate exports.
The price competitiveness of the Finnish products will suffer even in the euro area, into which countries with weakening currencies can import their products for lower and lower prices.
Previously in HS International Edition:
Weaker euro brings relief to Finnish industry (12.4.2010)
Weaker euro eases plight of Finnish export industry (25.2.2010)
Cheap dollar ties noose around forest industry neck (5.1.2010)