Last Friday (Jan. 24, 2014) the currencies of several, fast growing toy importing countries fell sharply in value. According to a Wall Street Journal article, “Investors Flee Developing Countries”:
- Argentina’s Peso is falling the fastest since 2002
- The Turkish Lira sank to a record low against the U.S. dollar
- The Russian ruble hit record lows
Why is this a concern? It is because,Argentina, Russia andTurkey were in the toy industry’s top 5 fastest growing markets; that according to Euromonitor's Utku Tansel, in his address to the World Congress of Play last September. These markets have been important to many toy companies because they have offset soft toy sales in the U.S. and E.U. Now, consumers in these countries will find that imported products will cost more and therefore reduce their purchasing; thus taking the air out of the expansion.
The drop was due to a combination of concerns: Dampening hunger for raw materials by China; political challenges specific to these countries and an anticipated drop in investment in these countries due to changes in policy by the U.S. Federal Reserve. Whatever the reasons, softening in these markets could have a negative impact on a global toy industry that has come to look to these countries as a source of growth.