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Dollar high, but exporters don’t sell foreign currencies
By devaluating the local currency by 9.3 percent, the State Bank hopes to encourage exporters, who have earnings in dollars, to sell them to banks, to improve the dollar supply and stabilize the exchange rate. But it seems that exporters still hesitate to sell their dollars.
Over the last week, since the adjustment of the dong/dollar exchange, the volume of dollars banks have purchased from export companies remains modest. Not all exporters want to sell their dollars to banks, despite the dollar increases, because they also need them to pay for import input materials. They fear that they will not be able to purchase dollars later, when necessary.
Another reason that explains why exporters still hesitate to sell dollars is that they still hope the dollar prices will increase further, and the recent exchange rate adjustment will be followed by further adjustments.
Hoang Van Dieu, Chair and General Director of Alta Company, says that as an export company, Alta’s earnings are in dollars. In previous years, the company sold dollars and then it could easily purchase dollars from banks when it needed to pay for imports. However, this has changed in recent years. His enterprise cannot purchase dollars from banks, even though it always sells the currency to banks.
Exporters are not sure that the exchange rate adjustment will bring benefit them, according to Nguyen Tuan Anh, Deputy General Director of Ut Xi Seafood Processing Company. In principle, the dollar price increase will have a good impact on the operation of Ut Xi, a shrimp export company. However, Anh says that the export has not been good since the beginning of 2011 due to the input material shortage. Therefore, the productivity of all shrimp export factories dropped significantly in the first two months of the year, and the exchange rate adjustment has not brought any benefits yet.
Meanwhile, Anh says, export companies are facing big difficulties since the shipping fees, charged in foreign currencies, will increase in accordance with the dollar price increase. Besides, the import feed prices have also increased, thus making the production costs higher.
“In principle, the 9.3 percent exchange rate increase should bring the profit of 2-3 percent to export companies. However, it will still depend on the strategies of each company,” Anh says.
A banking expert says that the exchange rate adjustment was anticipated, therefore, the dollar speculation was unavoidable. Even after the exchange rate adjustment, exporters still do not want to sell their dollars. “They will keep a wait-and-see attitude in the next one or two weeks,” the expert says. “If the exchange hovers around 21,700 dong per dollar, businesses will sell dollars. If the dollar sees an upward trend, they will continue to keep the currency on their accounts”.
However, finance experts do not see the possibility of another exchange rate adjustment in the near future, especially after the dong has been devaluated so sharply, by 9.3 percent.
The experts say that the exchange rate quoted by commercial banks is now 20,900 dong per dollar, much closer to the black market’s exchange rate. Therefore, it will be easier for banks to persuade people to sell kieu hoi (Overseas remittance – the money sent by overseas Vietnamese to their relatives in Vietnam) to banks and persuade export companies to sell dollars. Under the agreements reached by banks and export companies, the exporters who borrow loans in foreign currencies will have to sell dollars to banks right after they get their earnings in dollars.
Deputy General Director of ACB Bank Do Minh Toan says that the dollar price increase will not badly affect the enterprises which borrowed in dollars, because the enterprises drew up their business plans based on the anticipated dollar price increases.
vietnamnet
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