Euro volatility puts local exporters at risk
Euro volatility puts local exporters at risk
Local exporters are seeing their products exported to the European market less competitive as the euro has dipped against the US dollar due to the Greece debt crisis.
After over 61% of Greeks said “no” in a referendum on bailout for Greece from European creditors and the International Monetary Fund (IMF) over the weekend, the euro on July 6 fell against the US dollar by 1.1% to US$1.0988 by July 5 before bouncing back to US$1.106, down 0.44% compared to the evening of July 5.
As the exchange rate between the Vietnam dong and the US dollar is stable at VND21,835-21,840 per dollar, the local currency is firmer against the euro.
Vietcombank on July 6 quoted the euro at VND24,216 per euro, sliding 0.43% from July 3 but crashing by 8.54% in the year to date.
HSBC Vietnam reported that Europe is one of the top export markets for Vietnam, so the euro fall would affect Vietnamese exporters as their products are less competitive, coupled with the weakening demand of consumers in Europe due to the Greece debt crisis.
Truong Dinh Hoe, general secretary of the Vietnam Association of Seafood Exporters and Producers (VASEP), said a weaker euro may render Vietnam’s seafood export target of US$8 billion this year unobtainable though it is just the same as last year.
Although seafood export contracts are denominated in the U.S. dollar, the depreciation of the euro will make it harder for local enterprises to find new orders and local exporters may have to lower prices for European customers, Hoe said.
“As usual, local exporters have to deliver seafood to importers before they get payments,” Hoe said. “The further the euro declines, the greater local firms’ losses.”
According to VASEP, the United States, Europe and Japan have become the three biggest seafood importers of Vietnam in recent years with each accounting for 18-19% of the country’s total annual outbound seafood sales.
Le Hong Thang, general director of Duc Thanh Wood Processing Company, said customers from Europe want the company to cut prices to help them cope with financial difficulties and the euro fall.
