Wednesday, May 22, 2024

Businesses concerned about US dollar appreciation

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HANOI: Many enterprises are concerned about adverse impacts of the sharp appreciation of the US dollar on their business and production if the greenback continues to see fluctuation in the future, especially in the middle and end of the year.

The exchange rate between the Vietnamese dong and the US dollar at banks has recently increased sharply.

Last Wednesday, the US dollar surpassed the 25,000-dong threshold.

Vietcombank listed the US dollar at 24,750 dong for buying and 25,120 dong for selling.

The rates at VietinBank and BIDV were 24,720 dong and 25,140 dong, and 24,815 dong and 25,125 dong, respectively.

According to Dao Phan Long, a representative of the Vietnam Association of Mechanical Industries, enterprises that have to import raw materials for production or have US dollar-denominated loans are very worried as their input costs will increase significantly.

Nguyen Van Doan, deputy director of SKD Vietnam Precision Mechanical Co, said though the exchange rate increase was predicted, it certainly had an impact on enterprises.

Despite being a small company with a modest imports, his company had to spend hundreds of millions of dong extra for importing raw materials to date this year due to the strength of US dollar.

The rise has been a really big concern for large companies that have to spend thousands of billions of dong on importing raw materials.

If the exchange rate fluctuations are not controlled and continue to increase sharply in the middle and end of the year, enterprises will face even more difficulties as their demand for imported raw materials and accessories for production always increase then, according to Doan. The surge will reduce enterprises’ profits.

According to Than Duc Viet, general director of the Garment No. 10 Corp, the continuous and sharp exchange rate rise has caused his corporation, whose textile and garment products are exported to more than 10 markets around the world, to face difficulties in production and sales.

Viet explained that although an increase in the US dollar-dong exchange rate could help garment producers increase export value, they also had to spend much more money to import equipment, machinery and raw materials.

Besides, with consumer demand not really recovering strongly, the increase in the exchange rate also caused goods sold in the European and American markets to have higher prices, which led to lower demand, Viet said.

Finance expert Dr Can Van Luc attributed the exchange rate increase to the reason that the beginning of the year is when some foreign direct investment enterprises repatriated profits to their home countries. This is a seasonal factor and had the effect of increasing the demand for the US dollar. — Viet Nam News/ANN

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