Illustrative image (Photo: VNA)Vietnamese export enterprises said they are not likely to be affected by the State Bank of Vietnam (SBV)’s adjustment of the average inter-bank exchange rate between the VND and USD and the extension of the trading band for commercial banks in the immediate future.
According to Dang Phuong Dung, Vice President and Secretary General of the Vietnam Textile Association (VISTA), although the adjustment benefits domestic enterprises’ export activities, enterprises will have to import input materials such as raw cotton and chemicals for dyeing at higher prices.
Fortunately, prices for those materials have been pegged in business contracts from the outset of this year, which protects the enterprises from exchange rate risks, Dung said.
The Hanoi Trade Corporation (Hapro) – which is seeking foreign markets for its agricultural products – also benefits from the exchange rate surge, said Hapro Managing Director Nguyen Thi Thu Hien, highlighting that the company gets payment in USD from exports while purchasing agricultural products for processing in VND.
Appreciating the exchange rate adjustment as a timely response to the Chinese yuan’s devaluation, Vice Chairman of the Vietnam Association of Seafood Exporters and Processors (VASEP) Nguyen Hoai Nam said the move would partly help domestic exporters compete against counterparts in India and China where the governments have reduced short-term lending interest rates or adjusted exchange rate.
He added that however, the adjustment is still modest and thus its impact is not so obvious.
Meanwhile, Vice Chairman of the Vietnam Steel Association Nguyen Van Sua believed that the move is a double-edged sword, likely to cause substantial issues for the steel sector, which is suffering from a trade deficit.
Vietnam’s steel sector imports over 9 billion USD worth of materials every year. In the first six months of this year, the country bought more than 6.9 million tonnes of steel from foreign markets at a cost of over 3.82 billion USD, yet it only gained 873,000 USD from exporting 1.2 million tonnes of steel.
According to Sua, while the current adjustment of 1 percent is yet to pose a big problem for the sector, difficulties will arise when more similar moves are taken in the future.-VNA
