A number of Vietnamese fresh lychee are sold at AEON supermarket in Japan. (Photo: VNA)TheVietnamese dong hasstrengthened by 12% against the Japanese yen this year while it has weakened 2.6% against the USdollar.
Officialssaid the US Federal Reserve (Fed) has tightened monetary policy to curbinflation in the US. Prices in the US have been rising at their fastest rate inalmost 40 years while the Bank of Japan (BOJ) has continued with monetaryeasing to support the economy's recovery from the pandemic.
According toexperts, the depreciation of the Japanese yen has partially benefited some businesses with loans topay in Japanese yen and Vietnamese importers.
ManyJapanese food and household items are favoured by Vietnamese consumers. Theweaker yen has causedthe prices of many items being sold at supermarkets in Vietnam to fall by 15-20%.
Vietnam’sBRG Retail Co., Ltd. imports more than 1,000 items directly from Japan. Afterthe Japanese yen weakened against Vietnamese dong, the price of Japanese goods also went down.
"Weusually sign an annual contract with a supplier in Japan, but we pick up thegoods every month," said Nguyen Thuy Duong, Deputy General Director of BRGRetail Company.
Trinh BaNgoc, Director of Osaka Semitsu, said not all Vietnamese businesses wouldimmediately benefit from the depreciated Japanese currency. Annually, hiscompany had to buy equipment from Japan at a cost of 100 billion VND, however,his company had to purchase via an intermediary partner so it has not benefitedfrom a depreciated yen.
In contrast,Vietnamese exporters working with Japanese partners suffer a loss when theyconvert Japanese yen intoVietnamese dong.
Theyexplained that in the long run, a weak domestic currency will make importedgoods more expensive. As a result, Japanese consumers will limit their spendingon non-essential imports. This will lead to lower demand for imported goodsfrom all countries, including Vietnam.
When the USdollar appreciates against other currencies, including Vietnamese dong, it increases the pricecompetitiveness of exported goods from Vietnam. However, it raises costs forVietnamese importers.
In thecontext of a sharp increase in the price of raw materials, a stable exchangerate will help play an important role in reducing pressure on imports, whileminimising difficulties for businesses and supporting Vietnam’s economicrecovery.
Due to therapid and unpredictable fluctuations of the global market, the MoIT hascontinued to direct businesses to take advantage of Free Trade Agreements(FTAs) and make use of reduced tariffs.
In addition,the Ministry has also helped connect Vietnamese manufacturers with foreignsuppliers via trade promotion, market development, and the application of theInternet or logistics services, while creating more favourable conditions forimport and export activities.
The Bank ofJapan’s (BOJ) policy of keeping Japanese rates pinned down to support theeconomy, combined with rising US interest rates, has been a major factor in theJapanese currency’s recent weakness.
To combatuntamed inflation, the Federal Reserve raised its key interest rate by another0.75% on July 27 night — further increasing how much consumers will pay on debtlike credit cards, mortgages and other loans.
The federalfunds rate, which indirectly determines the cost of loans, has increased fromnear-zero to a range of 2.25% to 2.5%. This is the fourth-rate hike in fivemonths./.
VNA
