Red Sea tensions have not cooled down, rising exchange rates make import-export businesses more difficult because of expensive input and international transportation costs.
USD price cooled down yesterday but was still around 25,350-25,590 VND. In particular, the bank USD price increased by 1.9% and the free USD price increased by more than 3.8%. Compared to August last year, the exchange rate increased by 8%. On March 11, the greenback sometimes set a record of 25,700 VND.
Some export businesses are benefiting from rising USD prices. Because, when selling goods to foreign partners, exporters receive USD, converted to VND, they will earn more.
Vina T&T CEO Nguyen Dinh Tung said the USD price difference helps businesses have more resources to offset losses when USD prices fall and part of rising shipping costs from the US, Canada, EU, and UK markets.
But not all businesses benefit. Many companies with import activities are “not sitting still”. The director of a seafood import business in Ho Chi Minh City calculates that for each order of 100,000 USD paid to partners, the business will have to lose an additional 70-100 million VND.
Not to mention, he is worried that the continued increase in USD prices in the near future will cause the dong to lose value and increase inflation. “People will tighten their spending, causing purchasing power in the market to decrease, and businesses will become more exhausted,” he said.
Textile factory workers in Long An. Image: Quynh Tran
The pressure is even greater on businesses whose inputs depend on imported raw materials. Like the cashew industry, raw cashew nuts are imported for processing, most of which are paid in USD. “Therefore, the increase in exchange rates has impacted product costs,” said Mr. Tran Huu Hau, Deputy General Secretary of the Vietnam Cashew Association.
According to Mr. Tran Huu Hau, when importing goods, it only takes 5-7 days for businesses to process and export, so when collecting in USD, the burden is less on businesses. However, not all businesses have export orders immediately afterward. Therefore, they will have to recalculate the product price accordingly to make a profit.
Similarly, steel industry enterprises mainly import input materials such as iron ore, scrap steel, or coking coal. Representatives of the Vietnam Steel Association (VSA) forecast that businesses in this industry will face even more difficulties in the context of low domestic demand and declining exports.
Sharing concerns, Mr. Than Duc Viet, General Director of Garment 10 Company, said that this enterprise exports to more than 10 markets, such as the European Union (EU), the US, and Russia. Although there are export orders until April this year, recent exchange rate fluctuations may affect the business.
“Normally, an increase in exchange rate will increase the value of exports. But the downside is pushing up capital costs to import raw materials, machinery, equipment, as well as profits and losses from exchange rate differences, “Mr. Viet is concerned.
Analyzing more specifically, Mr. Pham Van Viet, Chairman of the Board of Directors of Viet Thang Jean Co., Ltd. (VitaJean), said that both raw materials are imported in USD and exported in USD, but there is a difference between buying and selling in USD. also causes businesses to lose some money. Although this level is lower than units that only specialize in imports, it still affects businesses when businesses are in difficult circumstances.
In addition, the increased exchange rate also “compensates” for additional difficulties for import-export enterprises with transportation contracts signed in USD. “Businesses are facing more difficulties,” Mr. Viet cited, adding that his company’s imported materials account for up to 40%, combined with increased logistics costs 3-4 times.
A leader of the Vietnam Logistics Association said that the transportation costs of import-export businesses are “more expensive” due to exchange rates. Not to mention, shipping rates from Vietnam to Europe and the East Coast of the United States have increased 2-3 times due to Red Sea tensions. “Costs increase but selling prices must still be maintained because contracts have been signed with customers. That means businesses have to reduce profits,” he said.
Experts recommend that import-export businesses pay attention to exchange rates to promptly adjust business plans, choose import-export markets and favorable payment currencies, and gradually reduce dependence on USD.
To prevent risks, Dr. Nguyen Tri Hieu said that, in the context of fluctuating exchange rates, businesses can use derivative financial tools such as forward foreign currency trading and swap contracts (SWAP). ). “Importers can be proactive in USD prices because the exchange rate has been determined in the contract upon signing,” Mr. Hieu said.
In the long term, businesses need to cut costs, lower prices, and gradually reduce dependence on imports. According to VSA representatives, businesses in the steel industry are looking for domestic sources of raw materials instead of imports. At the same time, they will have to find ways to lower prices and save costs to overcome the difficult period.
Viet Thang Chairman Jean also said that if the USD continues to increase strongly and red sea tensions increase, the company may shift to finding new export and import markets for raw materials. In addition, for goods sold in the domestic market, the Fall-Winter collection must adjust its selling price when input costs are increasing by 8-10%.
If the exchange rate tends to increase further, Mr. Hieu said that the State Bank could sell a part of foreign currency and attract dong through bills and bonds. In fact, since March 11, the State Bank has attracted money in three consecutive sessions in the interbank market through the treasury bill bidding channel. In total in the last three days, the operator withdrew nearly 45,000 billion VND, as an indirect move to reduce pressure on the exchange rate.
The government and ministries, according to this expert, also need to continue to promote exports and attract foreign investment, thereby reducing pressure on exchange rates.
According to VnExpress.net
