At average levels of body fat, this isn't really a thing.
But, if you get lean enough -- say, 12 percent body fat or lower, for men -- then, yeah, you'll start losing a certain quantity of body hair.
There are 2 main reasons.
The no. 1 reason is pretty much common sense, if you understand the basic physiology: Body-hair follicles live in the body's subcutaneous adipose (fat) layer. If you lose enough of that subcutaneous fat, yr body can't support as much hair anymore.
The no. 2 reason, which is less immediately obvious, is that body-hair growth is primarily mediated by testosterone, and testosterone levels start to fall once you get leaner than a certain level (which depends on natural set-points, but is around 10-15 percent bodyfat for most men).
Again, neither of these things applies to losing bodyfat within "normal" or "average" ranges. But, if you've lost LOTS of bodyfat and are very lean now -- especially if yr current diet is low in fat and cholesterol -- then, yeah, it's pretty easy to explain the loss of body hair under those circumstances.
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Of course, you can also lose some body hair just from friction with clothing. But, I'd assume that would be obvious enough, since the hair loss would be occurring in areas where there is... well, friction with clothing. (:
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There no medical data to suggest that exersize decreases body hair. The repetitive movement of fabric over skin can wear a way some hair, more so if it is fine. That might explain your experience.
Only to the degree that your clothes rub it off, which can definitely happen when you are exercising.
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