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Dollar increases make businesses exhausted
The dollar price in the black market is now higher by 2000 dong per dollar than the price quoted by commercial banks. The overly high dollar has made businesses exhausted.
As of December 2, The dollar market remains hot, though the prices set up by different foreign exchange shops were relatively different. The most commonly seenprices for yesterday were 21,550-21,480 dong per dollar (Sale and purchase). Some shops set very high prices at 21,600-21,500 dong per dollar. at the same time, commercial banks quoted much lower prices because of the low official exchange rate announced by the State Bank of Vietnam. Vietcombank, for example, quoted the dollar price at 19,500-19,495 dong per dollar.
Both businesses and experts have called for urgent and drastic measures to improve the situation, or the business environment will be distorted and the efforts to curb inflation will be in vain.
Drastic measures needed to stop law violations
Tuoi tre newspaper on December 2 quoted Dr. Tran Hoang Ngan, a member of the National Advisory Council for Monetary Policies as saying that in normal conditions, the gap of tens dong per dollar between the price in the black market and the official market can be accepted. It would be “abnormal” if the gap widens to 100 dong per dollar. Meanwhile, the gap has reached 2000 dong per dollar.
The worrying thing is that the black market’s exchange rate has guided for the transactions between banks and businesses. When the black market’s exchange rate increases, the exchange rate applied to the transactions between banks and businesses also increases accordingly. As the result, the exchange rate quoted by commercial banks exists onlyon paper.
If the current situation cannot be settled, everything would become “distorted”, analysts have warned, because the figures entered in the accounts are not the real figures. Though businesses have to pay 21,500 per dollar, the bills show that they pay 19,500 dong only. Meanwhile, the other 2000 dong will be “legalized” as other expenses.
In such circumstances, businesses have to “violate the laws”, because this is the only way which can help them successfully purchase dollars.
“The dual price scheme (The bank-to-business and black market prices) has been in use and this must not be accepted. It is necessary for the State Bank of Vietnam to apply measures, both administrative or economic, to narrow the gap between the quoted prices and the actual prices, ,” Ngan said.
The State Bank of Vietnam should also make a strong intervention into the gold market, because the market is leading the dollar price tothe black market.
High exchange rate, high interest rates putting pressure on goods prices
Answering Tuoi tre newspaper, Vo Quoc Thang, Chair of the Vietnamese Young Entrepreneurs’ Association, said that the dollar price increase has put big difficulties for enterprises. Especially, the price increase has badly affected investment projects, because enterprises have to import equipments and pay in foreign currencies.
Meanwhile, businesses also have to bear the burden of high interest rates which has made the production costs increase and forced enterprises to raise sale prices. As the result, enterprises have to adjust their production and business plans, thus paving the way for imports to flood Vietnam’s market, and pushing the inflation rate and trade deficit up.
Export companies miserable
Saigon tiep thi newspaper on December 1 reported that big enterprises in Hai Phong City have suffered from heavy losses due to the five percent dollar price increase
Pham Van Minh, a senior executive of LS-Vina Company said that every month, the company has to import 18-20 million dollar worth of materials for local production. The company pays dollars to import materials, but it receives Vietnam dong when selling products. As the result, the company has incurred heavy losses from the dollar price increases.
“After two times of exchange rate adjustments, the company has incurred the loss of four million dollar,” Minh said.
He went on to say that in order to reduce loss, the company is now trying to purchase import materials from domestic sources and pay in dong. However, it would not be a long term solution, because the materials are also the imports, which arrived in Vietnam many months ago, when the prices were lower.
Thanh Van
vietnamnet
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