Foreign-currency price fluctuations help some businesses, hurt others
Foreign-currency price fluctuations help some businesses, hurt others
The price fluctuations of the US dollar, euro, Japanese yen and Korean won have helped many businesses prosper and hurt others.
Hard foreign currencies continue to fluctuate, affecting businesses’ performance in the fourth quarter and the entire year of 2014.
In late October, PPC, the Pha Lai thermopower plant, reported a VND340 billion increase in the Q3’s profit from financial investments.
The company incurred a cumulative loss of VND120 billion from business activities, but made a profit of VND410 billion from the dong/yen exchange rate fluctuations.
The exchange rate fluctuations always have a big impact on the operation of the power generation plant, which received a huge loan worth 25 billion yen.
The loan had fallen to VND5.3 trillion by June and to VND4.8 trillion by the end of September 2014.
The gains and losses of the hard currencies in the world have helped turn many unprofitable businesses into profitable ones, and vice versa.
The Ha Tien 1 Cement Plant, for example, had a net profit of VND80 billion in Q3 because its debt worth $76 billion has lost a part of its value due to the depreciation of the euro.
The plant incurred a loss of VND33 billion during the same period last year.
The Bim Son Cement Company (BCC), which has a long-term debt of 56 million euro, has also “escaped a loss” thanks to the euro depreciation.
The Ba Ria Thermopower Plant, which owes VND34 billion in debt and tens of millions of dollars in debts, made an additional VND30 billion for its coffers in Q3.
Analysts noted that the enterprises which had borrowed in euro and Japanese yen were the biggest beneficiaries from the currencies’ price decreases against the US dollar and Vietnam dong.
The euro lost its value after the European Central Bank cut interest rates and launched stimulus programs to settle low inflation and weak growth.
Meanwhile, the Japanese yen has depreciated as the Japanese central bank continues measures to loosen monetary policies in an effort to cope with deflation and push up the world’s third largest economy.
Vietnamese businesses have not always gained from the currencies’ price fluctuations. In the case of PPC, for example, it incurred a huge loss of VND4 trillion in a five-year period, from 2007 to 2011, because of the appreciation of the yen.
However, as a result of the “shift of the wind”, the yen depreciation in 2012 and 2013 brought a profit of hundreds of billions of Vietnamese dong to PPC.
The company also expects a “bountiful year” for 2014, thanks to the yen depreciation.
