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Billions VND lost due to exchange rate fluctuations
What is behind the VND/US$ exchange rate fluctuations is the billions-dollar losses of import-export companies.
Businesses said that in 2008, besides the big difficulties caused by the high inflation and high input material prices, they have had to struggle with sharp exchange rate fluctuations, which have caused them losses of billions of dollars.
In May and June 2008, the market witnessed the escalation of the dollar price. At that time, import companies had to purchase dollars at VND18-19,000/US$1.
The sharp price increase caused Binh Minh Plastics Joint Stock Company the loss of VND5bil. The company imported 2,500-3,000 tonnes of materials a month in May and June.
Meanwhile, the Vietnam Textile and Garment Group said that it lost VND50bil due to the gap between the sale price of the dollars it got from exports and the purchase price of dollars it purchased from banks to import materials.
Analysts have pointed out that the exchange rate fluctuations were the reason behind the commodity deadlock at ports several months ago. Commodities arrived in ports, but enterprises did not make customs declarations to clear the imports. A lot of enterprises opted to pay fines for breaking contracts and pay for re-exporting the commodities to the sellers.
In theory, enterprises can save themselves by using exchange rate insurance services. However, a representative of the Aviation Import-Export Joint Stock Company said that in the context of the sharp fluctuations, the fees required by banks prove to be unbearable.
Dam Thi Huyen, a senior official from Petrolimex, the key petrol importer and distributor in Vietnam, said that the exchange rate policy has greatly affected the business results of enterprises.
From the beginning of the year to the end of March 2008, banks’ foreign currencies were in excess. The real exchange rate was lower than the rate announced on the interbank market; however, Petrolimex could not purchase dollars at the low rate. It had to purchase dollars from banks at the rate VND300-400/US$1 higher than the real rate.
However, in April 2008, the foreign currency price increased dramatically. The gap between the exchange rates of the import time and the rates of the payment time led to the petrol cost increase of 2-3%.
Citing the examples, enterprises have proposed that the State Bank of Vietnam follow a more suitable policy which allows enterprises to avoid sharp and unexpected fluctuations which can cause them big losses.
Most recently, the VND/US$ exchange rate unexpectedly rose by VND240/US$1 on October 20-23 with the rate on the black market surging to VND17,000/US$1.
However, it was lucky that the dollar price has decreased and stabilised. The interbank market exchange rate now is at VND16,517/US$1, a decrease of VND3/US$1 over last week. The rate on the black market has fallen below the VND17,000/US$1 threshold.
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