Importers hit by strengthening euro

Euro-USD exchange rates over the past year. Photo by Reuters

The euro has appreciated by 17% against the U.S. dollar since last September and is trading at a 17-month high.

It has gained 3.4% against the Vietnamese dong since the beginning of this year.

This has increased prices for firms that import machinery and equipment from Europe such as Xen Lu Lo Technology Joint Stock Company, which operates in the paper and cement industries.

Pham Tri Cuong, CEO of PowerTech Trading and Technology Company, which imports machinery for the energy industry, said half of all orders used to be paid in euro, but are now paid in other currencies.

"We ask partners to accept payments in USD instead of euro. If they do not agree, we buy exchange rate insurance or fix exchange rates with banks."

A factory belonging to the Vietnam National Textile and Garment Group. Photo by VnExpress/An Phuong

Exporters of textile and garment, footwear and certain other items are unaffected since they import intermediate goods mostly from Asian countries such as China.

Wood and woodwork businesses said they are not affected by the strengthening euro due to weak demand.

Wooden furniture imports from the EU have almost come to a standstill, they said.

Nguyen Xuan Duong, chairman of Hung Yen Garment Joint Stock Company, said however the strong euro is a temporary phenomenon.

On the other hand, exporters of garments, textiles, seafood, and other items to Europe are benefiting because 15-20% of their deals are in the euro.

Vietnam’s exports were worth US$164.45 billion in the first half of this year, down 12% year-on-year, according to data from the Ministry of Industry and Trade.

Exports to the EU were worth nearly $22 billion, 10% down due to weaker demand.