Hanoi (VNS/VNA) – As the global commodity and foreign exchange markets experience many fluctuations, national exporters should pay attention to the
exchange rate between the Vietnamese dong and other currencies to enable them to choose the most profitable ex-import markets and payment currencies.
Phan Minh Hoa, professor of economics at RMIT Universityrecommended these measures as local businesses began to suffer from the headwinds of large swings in the US dollar, euro and Japanese yen on their production and business performance.
The dollar has strengthened strongly this year against the euro and the Japanese yen, as the US Federal Reserve raised interest rates to curb inflation that has been high for 40 years.
While the euro dipped below parity with the dollar last month – a 20-year low, the yen also hit its lowest level against the dollar in 24 years in June 2022.
The Vietnamese dong has so far depreciated around 2% against the dollar and is expected to depreciate below 3% in 2022, according to VNDirect Securities Company.
“In theory, the appreciation of the US dollar can increase export earnings, and exporters can benefit when converted into dong, but in fact, exporters also have to pay higher costs for imported materials as well. only logistics and warehousing costs,” finance and banking experts Can Van Luc told Viet Nam News.
“Export prices only increased by 9% on average, while import prices increased by 11%,” Lực said, adding that many importers of Vietnamese products have asked Vietnamese exporters to reduce their prices.
In addition, as most currencies, including the yen and the euro, have weakened considerably against the dollar, the demand for import goods from the Japanese and European markets has decreased, negatively affecting Vietnamese exports, according to Luke.
Kim Thu, a representative of the Vietnam Association of Seafood Exporters and Producers, said the sharp depreciation of the Japanese yen against the US dollar had prompted Japanese importers to suggest renegotiating import prices to compensate. their losses when the yen weakened.
In addition, some Japanese importers, who have already signed import contracts, asked to negotiate to receive the goods more slowly by three to five months to wait for consumers to get used to the new prices.
Due to heavy losses when the local currency depreciates, Japanese importers would adjust their import plans and demands, Thu said.
According to Thu, although Vietnamese exporters were not too affected by the depreciation of the yen and the euro, since most of their import and export transactions were in US dollars, they were affected by the decline in import demand as importers’ profits declined.
Moreover, when the yen and the euro weaken, imported goods become more expensive. At that time, Japanese and European consumers chose essential items at affordable prices, which reduced consumer demands.
Vo Van Phuc, general manager of Vietnam Clean Seafood Joint Stock Company, said consumer purchasing power has declined significantly and seafood exports have been struggling since August 2022.
In addition to choosing old import markets and payment currencies, Hoa said, to hedge against exchange rate risks, local businesses should choose banks with good trade finance capacity and use financial derivative instruments. such as currency futures and swaps.
In the long term, companies would need to increase the competitiveness of exported goods and make a difference in their products.
Exporters, which currently use many imported material enterprises, should seek alternative material resources, especially domestic ones, to gradually reduce import dependence, Hoa suggested.
In addition, Hoa said, policymakers must also ensure a balance between economic growth goals and controlling inflation.
He explained that if the dong depreciates too quickly, the cost of importing raw materials and inflation will rise and affect production. In addition, there was an increase in the external debt burden or the risk of being considered by the United States for currency manipulation.
On the contrary, if the exchange rate was too tight, while the currencies of other countries depreciated, export goods would also lose their competitiveness, Hoa./ said.