Exchange rate hike pays modest gains
Exchange rate hike pays modest gains
Businesses say the appreciation of the US dollar by the State Bank of Viet Nam (SBV) in June has positively affected their businesses, although the benefits remain modest.
On June 19, the central bank increased the dong-dollar interbank exchange rate by one per cent, after keeping it intact for one year, with one dollar currently equivalent to 21,246 dong, instead of 21,036.
SBV Monetary Policy Department director Nguyen Thi Hong said the move was meant to support the nation's export profile and economic growth during the remainder of the year, as the demands of the economy were low and business performances remained difficult.
"The banking sector is sharing its difficulties with us," said Bac Viet Steel Company director Tran Anh Vuong. "The recent adjustment in the exchange rate followed a road map and was transparent, and it is supporting enterprises very well."
But Vuong said the impact that the change had on production and export was insignificant, except for such factors as wages and electricity prices, many other inputs were also affected by the dollar price. These factors accounted for 30 per cent of all inputs at his firm, so profits were limited.
Further, CMC Joint Stock Company director Nguyen Quang Huy agreed that the move was good for enterprises in the current context, although the impacts were small.
Nguyen Thi Lan, director of animal feed company Anh Dung Investment, said importers did not expect the exchange rate increase, though they had found themselves paying rising port service charges, as well as production costs, and had to recalculate their product prices.
Meanwhile, economist Tran Du Lich said the adjustment was not a change in the SBV's exchange rate policy, as had been predicted. Rather, it followed the market supply and demand and was consistent with price developments in Viet Nam in past years.
In recent days, when dong-dollar exchange rates tended to fall on the free market, the SBV raised dollar buying prices sharply at the regular exchange. This showed its consistent policy to maintain dollar prices and support exports, market observers said.
Further, banking expert Nguyen Tri Hieu said the appreciation of the dollar was necessary, though the one-per-cent adjustment will not have any significant impact on the economy. This indicated the central bank's caution in implementing operational policies within the context that the economy still faced many challenges.
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