Paying in Dollars, Budgeting in Euros: Currency Risk on Knitwear Orders

By YZR Sweaters · 2026-10

We quote knitwear every day in USD, EUR and RMB, and the most expensive misunderstandings we see are not about price at all — they are about which currency the price was really in. A buyer who budgets in euros, signs in dollars and pays three months later is running an unhedged FX position whether or not anyone in the company calls it that. Here is how to handle it deliberately.

Why knitwear orders are unusually exposed

Knitwear combines three things that make currency risk bite: long lead times (yarn booking, knitting and finishing add up to 60–90 days before shipment), split payments (a deposit at order and the balance at shipment), and thin margins on value programmes. The deposit goes out near the current rate; the balance follows months later. If the dollar strengthens 6% in between, a programme quoted at a 20% markup has lost a third of its planned margin before it reaches the warehouse.

Which currency should the contract be in?

Chinese knitwear factories most often quote in USD, increasingly in RMB, and occasionally in EUR. Each choice allocates the risk differently:

• USD quotes — the default. The factory owns RMB/USD risk; you own USD/your-selling-currency risk. If you sell in USD (Amazon, US wholesale), a USD quote is close to a natural hedge.
• RMB quotes — growing, and honest in one sense: the factory's costs are in RMB, so an RMB price can be held longer without a currency buffer inside it. But then you own RMB risk directly, and RMB invoicing needs your bank and freight partner to handle it smoothly.
• EUR or GBP quotes — possible, but expect the factory to build a conservative buffer into the price. You pay for certainty; that is a fair trade, just know you are paying it.

There is no universally right answer — the right answer is that the currency is written down, with a price validity window attached, before any deposit moves. Our overview of payment terms covers the deposit/balance mechanics this sits on top of.

The three separate exposures on one order

Buyers tend to think of "the exchange rate" as one number. In practice a single knitwear order carries three exposures with different timings: the deposit payment, the balance payment, and the landed-cost items paid in your own currency — freight, duty and inland logistics. The first two are hedgeable; the third is usually already in your home currency but inflates with freight cycles. Check how duty and freight are calculated before assuming your landed cost — our guide to HS codes and duties on sweater imports explains what is actually taxed and when.

Practical defences for buyers without a treasury department

• Match currencies where you can. If you sell in the same currency you buy in, the exposure mostly cancels. This is the cheapest hedge that exists.
• Forward contracts. Most business banks will fix a rate for a future date for a modest margin requirement. Even covering just the deposit fixes a third of the exposure cheaply.
• Multi-currency accounts. Holding the quote currency between order and payment removes the pressure to convert at the worst moment.
• Price validity windows. Ask the factory how long the quote holds — 30 days is common — and re-confirm before signing if the window has lapsed. A stale quote is a future dispute.
• Budget at a guarded rate. Add 3–5% of headroom to the budgeted exchange rate rather than the spot rate. Unsexy, and it saves seasons.

The currency adjustment clause

When a factory holds a price for 90 days, someone owns the risk that period, and the honest way to share it is a clause rather than a surprise surcharge. A workable version is three sentences: the quote is valid for X days at the reference rate recorded in the contract; if the rate moves more than an agreed threshold (3% is typical) between contract and the deposit/balance due dates, the price adjusts by half the movement beyond the threshold; and any adjustment is documented with the bank rates on the relevant dates. This protects both directions — the buyer shares pain when the factory's currency costs rise, and gains when they fall. It belongs near the payment clause of the agreement covered in our guide on knitwear supply contract essentials.

What to ask the factory before signing

Four questions settle most of it: Which currency is this quote truly in, and valid until when? What reference rate did you use? What happens if the rate moves 5% before the balance is due? And do you accept RMB if our side prefers it? A factory that answers these crisply is telling you it has managed the question before — and a quotation that ignores them is telling you the buffer is inside the price somewhere.

YZR Sweaters is a Dongguan knitwear manufacturer producing OEM/ODM sweaters at flexible MOQ. We quote in USD, EUR and RMB, record the reference rate with every price, state the validity window up front, and will discuss adjustment thresholds openly rather than hiding a buffer in the price. We work with BSCI, SEDEX and Oeko-Tex certified factories and welcome third-party inspection.

Frequently asked questions