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Exchange rate costing businesses billions VND/day
Lam Thao Phosphate Fertiliser Company has been incurring the loss of VND1-2bil on every 4-5,000 tonnes of fertiliser it sells due to the VND/US$ exchange rate fluctuating.
The more produced, the bigger the loss
Lam Thao Phosphate Fertiliser, which has three times been awarded the title of Labour Hero, is now facing big challenges: the more products it churns out, the more money it loses. It is a state-owned enterprise belonging to the Vietnam Chemicals Corporation under the Ministry of Industry and Trade, specialising in making fertiliser and basic chemical substances to serve industries and national defence.
Lam Thao’s representative said that in order to make NPK, the company has to import a lot of materials, for which the company has to pay in dollars. Previously, when the dollar price hovered around VND16,000/US$1, the company’s profit was stable. However, since the dollar price has been skyrocketing, it is suffering big losses. Every day, it loses VND1-2bil on average on the 4-5,000 tonnes of products sold.
Ha Tien 1 Cement Company said that with the current exchange rate, the company has to spend VND700mil a month more for importing clinker alone.
Every month, the company has to import 150,000 tonnes of clinker, worth $7.3mil. It has to buy dollars at VND17,300/US$1, an increase of VND1,000/US$1 over early May.
Businesses expecting State Bank’s help
Unofficial sources said that late last week, banks’ transactions were made at over VND18,000/US$1. Meanwhile, on the black market, dollars were sold at VND19,700/US$1.
Businesses all complain that the skyrocketing dollar prices have been making them slowly perish, and that they expect the intervention of the State Bank.
Bankers said that they do not want to sell dollars to businesses at high prices, but they have no other choice, as they themselves have to buy dollars at high prices.
The State Bank of Vietnam has been trying to set exchange rates that are affordable for businesses. However, in fact, businesses cannot purchase dollars at the rates.
The State Bank of Vietnam has threatened to impose heavy punishment on banks that sell dollars at prices higher than the allowed levels. However, if the exchange rate is set at overly low levels, banks will not be able to buy dollars to re-sell to their clients.
VNN
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