Exporters enjoy gains from stronger dollar

By Le Tuyet, Dat Nguyen   July 19, 2022 | 05:26 pm PT
Exporters enjoy gains from stronger dollar
U.S. dollar notes are seen in this November 7, 2016 picture illustration. Photo by Reuters/Dado Ruvic
"All our income is in USD while most expenses are in VND, which means we gain when we exchange the USD to VND to pay salaries and rents," said Pham Thi Chau.

Chau, head of human resources from the electronics manufacturer Vexos Vietnam in District 7, Ho Chi Minh City, said her company's products are paid for in the greenback as it exports mainly to the U.S. and Europe.

Garment maker Phong Phu in Thu Duc City, whose customers are all foreign buyers who pay in dollars, have also been profiting from a stronger greenback.

The company pays for Vietnamese materials and labor costs in VND while receiving its income in USD, and the stronger U.S. currency means its revenue has been rising, said Nguyen Thi Lien, deputy CEO.

These two companies are among many Vietnamese exporters benefiting from the surge in USD amid global economic uncertainties.

As U.S. inflation hits its highest level in 40 years and the Russia-Ukraine crisis showing no signs of ending, the greenback soared to its highest value in 20 years last month and has been hovering around that level since.

Although it has only gained over the Vietnamese dong by around 2 percent this year, exporters have reported increasing revenues.

Rubber manufacturer Casumina, with 60 percent of materials sourced domestically and the rest internationally, is getting more from each transaction with foreign buyers as 55 percent of its products are exported to the U.S., some Southeast Asian countries, South Africa and Brazil.

But the company has foreign loans which it has to pay for in U.S. dollars, and a weaker dong means it has to pay more than before.

"In the long run, if we need to borrow more in dollars, our revenues could be negatively affected by the exchange rate," said CEO Pham Hong Phu.

A stronger USD is also raising concern in some sectors where businesses have to compete with exporters of other countries whose currencies have declined more than the dong against the greenback.

Tran Huu Hau, deputy general secretary of the Vietnam Cashew Association, said that Vietnamese cashew exporters were seeing rising competition from their African counterparts who trade directly in EUR with European buyers.

The fall of the EUR to the lowest level in two decades means that African exporters are making bigger gains in their transactions than Vietnamese companies that use the U.S. dollar for international trading.

For this reason, Vietnam’s cashew exports volume is set to decline this year, he said.

Tran Viet Anh, deputy chairman of the Ho Chi Minh City Business Association, said many companies that engage in both export and import of almost equal value have not seen any benefit from the rising dollar.

Some exporters have been looking to source more inputs from markets that do not use the greenback, like Japan, China and some European countries to reduce their expenses, he added.

Seafood exporters are seeing a mixed picture.

Their exports to the U.S. rose 96 percent year-on-year in the first six months as high inflation in the importing country pushed up demand for canned tuna, according to Vietnam Association of Seafood Exporters and Producers (VASEP).

But a weaker euro has slowed down growth in exports to Europe to just 4 percent in the same period as Europeans tighten their belts, the association added.

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