Vietnamese exporters fret over weaker yuan

By Dat Nguyen   November 6, 2018 | 05:40 pm PT
Vietnamese exporters fret over weaker yuan
A clerk counts Chinese yuan banknotes at a branch of China Construction Bank in Nantong, Jiangsu province. Photo by Reuters
While the weakening yuan has allowed Vietnamese importers to benefit from cheaper material costs, exporters are feeling the pinch.

The yuan declined to 6.9075 per U.S. dollar on Nov. 6, according to Xinhua News Agency. The move has dragged the yuan down by almost 9 percent from the beginning of this year, the steepest drop in the last 10 years.

A yuan was selling for VND3,327 on Monday, down from VND3,595 in February 5, according to Vietnam Customs. This means that the dong has gained 7.4 percent over the yuan in the last nine months.

Experts say that this is an opportunity for Vietnamese businesses to import cheaper materials.

Economist Bui Trinh told the Thanh Nien newspaper that the falling yuan will allow local businesses to gain from importing materials and machines, 90 percent of which are obtained from China.

A Vietnamese plastic importer said as his firm pays with the weaker yuan, it has become more competitive in the market. Up to 70 percent of this company's materials are imported from China. 

An importer of Chinese fruits said buying fruits from China is cheaper and prices in Vietnam remain the same. "So I’m making more profit.”

But the falling yuan has created more difficulties for Vietnamese exporters.

Bui Thanh Van, director of trade firm Van Phat Ltd., which exports produce to China, said that the falling yuan has lowered the amount of orders they used to get.

Some Vietnamese produce are being priced higher than other countries in ASEAN, such as Thailand and Malaysia, and countries which are lowering their currency values to increase exports to China, he said.

“The weakening of the yuan has made it a challenge to export to China.”

Truong Dinh Hoe, general secretary of the Vietnam Association of Seafood Exporters and Producers, said that as China has been one of Vietnam’s top export markets in the last two years, the weaker yuan would make it difficult for seafood exporters.

China was among the top four largest importers of Vietnamese seafood in the first eight months this year, along with Japan, South Korea and the U.S., according to the Ministry of Agriculture and Rural Development. These four markets accounted for over 54.1 percent of Vietnam’s total seafood exports in the same period, it said.

The falling yuan will likely increase prices and lower orders from China, affecting the local seafood market, Hoe said.

Experts are also worried that the weaker yuan will lead to an increasing number of Chinese goods entering Vietnam with more competitive prices, making the nation’s trade deficit even higher.

From January to September this year, Vietnam had a trade deficit of $18.45 billion with China, its largest trade partner among over 200 countries and territories, according to Vietnam Customs.

Trade turnover between Vietnam and China reached $93.69 billion last year, up 23.2 percent from 2016, accounting for 22 percent of Vietnam’s total trade turnover, Vietnam Customs reported. The figure is estimated to reach 100 billion this year.

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