Foreign exchange-rate adjustment deals a blow to dollar borrowers
11-09-2015 11:06:47+07:00
Foreign exchange-rate adjustment deals a blow to dollar borrowers
The time when Vietnamese businesses rushed to borrow US dollars to enjoy low interest rates is over.
Tien Phong quoted a Bao Viet Securities Company (BVSC) report released on August 31 as saying that a lot of businesses have suffered from the forex adjustment.
The Pha Lai Thermopower JSC (PPC) has incurred a heavy loss of VND213 billion from the exchange rate adjustment. If the August 27 yen/dong exchange rate remains unchanged until the end of the third quarter, BVSC said PPC would incur a loss of VND213.8 billion.
The Nhon Trach 2 Power Company (NT2), which has received benefits from the euro price sharp decrease over the last two years, has been warned it will take an exchange rate loss in the third quarter of 2015, estimated at VND224 billion, if the August 27 euro and dollar prices remain unchanged until the end of Q3.
Three cement manufacturers, including Ha Tien 1, Bim Son Cement and But Son Cement, which are euro borrowers, also foresee that they would lose money in the third quarter because of the exchange rate adjustment.
However, they hope they would still make profit in 2015 because the dong was still strong against the euro earlier this year.
BVSC has also predicted big difficulties for shipping firms, most of which borrow capital in dollar to expand their fleets. As the dong has lost 5 percent of its value since the beginning of the year, the shipping firms, which are bogged down in difficulties, would get even worse.
The dong/dollar exchange rate adjustment has become a big concern for foreign currency borrowers, who had experienced a stable period thanks to the State Bank’s dong stabilization policy.
Thoi Bao Kinh Te Sai Gon has quoted its sources as saying that Nhon Trach 2 Thermopower JSC still owes $135 million and 123 million euros, while PVD, a drilling service firm, has borrowed more than $600 million, Pha Lai power plant 25.6 billion yen and Vingroup, a real estate developer $670 million.
Of these borrowers, PVD has earnings in dollars which can protect it from foreign currency price fluctuations. Meanwhile, other companies have to buy foreign currencies with dong to pay debts.
It is estimated that the borrowers’ profits may decrease by tens of billions of dong for every one percent of the dong depreciation.
A report shows that the outstanding loans in foreign currencies of the local banks in the first eight months of the year decreased by 1.23 percent compared with the same period last year.
