The euro’s steady climb against the dollar since spring has exporters across Latvia, Lithuania and Estonia recalculating margins ahead of the autumn order season, with sectors from furniture to electronics components facing a currency headwind just as global shipping costs remain elevated.
Why the euro has strengthened
The single currency has appreciated roughly 6% against the US dollar since January, a move analysts attribute to a mix of relative eurozone interest rate stability and shifting expectations around US monetary policy. For exporters selling into dollar-denominated markets, the effect is straightforward and unwelcome: goods priced competitively in January now cost buyers noticeably more in dollar terms.
Who feels it most
Baltic furniture manufacturers, a sector with outsized export exposure relative to the region’s economic size, appear particularly exposed. Jānis Ozols, export director at a mid-sized Latvian furniture manufacturer supplying retailers across North America, said the company has already renegotiated pricing with two major US clients this summer. “We can’t simply raise prices to match the currency move without losing orders to competitors in Vietnam or Mexico,” he said. “So the margin compression has to come from somewhere else.”
Not everyone is worse off
The picture is less uniform for firms trading primarily within the eurozone or importing dollar-priced raw materials. Baiba Krūmiņa, chief economist at Citadele Bank, noted that companies importing components priced in dollars — electronics manufacturers in particular — are seeing input costs fall in euro terms, partially offsetting the pain felt by dollar-exposed exporters. “It’s a redistribution within the economy more than a uniform hit,” she said. Eesti Pank’s latest trade bulletin estimates that a sustained 5% euro appreciation could shave roughly 0.3 percentage points off Estonia’s export growth for the year if it persists through the fourth quarter, a modest but not negligible drag on an economy still leaning on exports to sustain its lead over neighbouring growth rates.
What businesses are doing about it
Trade associations across the three countries report growing interest in currency hedging instruments among exporters that previously operated without formal hedging strategies, alongside a push to diversify sales toward eurozone and other European markets less exposed to dollar volatility. Lithuanian and Latvian central bank officials have offered similar, cautious estimates, while stressing that currency effects remain secondary to shipping costs and European demand as the primary drivers of export performance this year.
For now, exporters like Ozols are treating the stronger euro as one more variable to manage alongside elevated shipping costs and the broader economic recalibration already underway across the region this year, as detailed in this summer’s midyear economic comparison of the three Baltic states.
