Businesses concerned about rising exchange rate pressure

Wednesday, Apr 24, 2024 08:34

A bank teller counts the dollar at a transaction office in Hà Nội. The USD/VNĐ exchange rate listed at some banks on Tuesday was at VNĐ25,180 and VNĐ25,485 per dollar for buying and selling, an increase of VNĐ20 compared to the previous session. — Photo

Though the State Bank of Vietnam (SBV) has announced it is selling the US dollar to intervene in the USD/VNĐ exchange rate since April 19, the greenback price has remained high, which has been directly affecting many domestic enterprises.

The USD/VNĐ exchange rate listed at VietinBank and BIDV on Tuesday was at VNĐ25,180 and VNĐ25,485 per dollar for buying and selling, an increase of VNĐ20 compared to the previous session.

Vietcombank’s rate also stood high at VNĐ25,145 and VNĐ25,485 per dollar for buying and selling.

This was the sixth session that the selling price of the dollar at banks has consecutively broken its peak, moving closer to the threshold of VNĐ26,000 per dollar.

On the unofficial market, the dollar price on Tuesday also increased by VNĐ90 per dollar for buying and VNĐ110 per dollar for selling compared to last week to reach VNĐ25,770 and VNĐ25,870 per dollar for buying and selling, respectively.

In the context of the sharp appreciation of the dollar, the SBV on April 19 announced it was selling the greenback to banks with negative foreign currency status at the price of VNĐ25,450 per dollar, VNĐ23 per dollar lower than the SBV’s cap, to influence the exchange rate. This move is expected to help cool down the domestic exchange rate but it is continuing to accelerate due to the high level of the dollar in the international market.

The sharp increase in the dollar price has caused difficulties to many domestic companies.

A seafood import company in Hà Nội, which declined to be named, calculated that for each US$100,000 order paid to a partner, it would have to spend an additional VNĐ100-150 million.

Nguyễn Đặng Hiến, General Director of Tân Quang Minh Company, said the beverage manufacturing industry is facing many difficulties, including increased exchange rates.

According to Hiến, his company currently has to import some types of orange juice, some flavours and plastic beads from other countries and most have to be paid in the dollar, which has increased production costs by 4-5 per cent. However, product selling prices have not increased for many months due to weak purchasing power.

To limit damage from the rising exchange rate, Tân Quang Minh Company is trying to promote the search for domestic raw material sources to replace imports, and increase exports to markets paying in the dollar, Hiến said.

Director of SKD Vietnam Mechanical Company Nguyễn Văn Kết said companies’ plans will not be affected if the Vietnamese đồng depreciates by some 2-3 per cent this year as previously forecast. However, the đồng has so far strengthened by nearly 5 per cent, while raw material prices, input and international transportation costs remain high due to rising gasoline price, which cause more difficulties for businesses.

In the context of the rising exchange rate, experts recommend that importing businesses need to pay attention to exchange rate risk prevention tools, and carefully consider the terms in foreign currency loan contracts.

Besides, it is also necessary to maximise domestic resources and find alternative domestic partners to gradually reduce dependence on import markets to lower costs and limit risks when the world market fluctuates.

In addition, businesses should also choose banks with good trade support capabilities, and consider using derivative financial instruments and swap contracts, appropriately and in accordance with regulations, to reduce risks when exporting in the context of the current exchange rate fluctuations. — VNS

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