Stronger USD has a two-way impact on Vietnamese enterprises

VCN - The risks of inflation, exchange rate and interest rate are increasing not only in the country but also in major export markets of Vietnam are major obstacles for enterprises in the near future. But that context still opens up many opportunities for Vietnamese enterprises.
Packing line for export goods at Phuc Sinh Group. Photo: DNCC
Packing line for export goods at Phuc Sinh Group. Photo: DNCC

More opportunities for agricultural products and food

Vietnam's economy recorded an impressive recovery in the first half of 2022 with an increase of 6.42% in GDP and a growth of 17.3% in exports over the same period last year. All signs show that Vietnam is on a steady recovery.

Many international organizations have raised their growth forecasts for the whole year of 2022. For example, HSBC raised its forecast to 6.9% (from 6.2% and 6.6%) and said that Vietnam's growth rate is likely to lead the region; UOB also adjusted Vietnam's GDP growth in 2022 to 7% from 6.5%.

Although the overall situation looks optimistic, according to Ngo Dang Khoa, national director of foreign exchange, capital markets and securities services, HSBC Vietnam, the factors hindering growth are still there.

Specifically, Vietnam is facing a series of challenges in the context of high world fuel prices. That will cause fuel costs to increase, adversely affecting Vietnam's trade balance. “This trend is expected to continue, putting downward pressure on inflation. The positive point is that despite high energy costs, moderate food inflation, and relatively stable domestic production, it helps to keep inflation under control," said Khoa.

Although domestic inflation is still under control, in major export markets of Vietnam such as the US, EU, etc., the situation is much more difficult. The inflation rate in the US in June increased to 9.1%, the highest level in the past 40 years; in the Eurozone it is 8.6%.

High inflation raises commodity prices, thereby adversely affecting Vietnamese exporters, especially for non-essential goods. Some Vietnamese textile and garment enterprises said that the number of export orders to Europe has decreased by nearly 20% in recent months. This shows that the demand of this market is weakening before the effects of inflation. In that situation, Vu Duc Giang, Chairman of the Vietnam Textile and Apparel Association, recommended that enterprises should closely follow market developments to adjust production plans accordingly.

Meanwhile, agricultural products and foodstuffs are facing the opportunity to increase export turnover when food prices in the US and Europe are increasing sharply due to supply shortages.

Specifically, many EU countries and the US are "punishing" Russian pollock - which is a strong competitor to pangasius, causing a significant reduction in the supply of white fish in this region. The rising price of white fish creates opportunities for Vietnamese pangasius to grow in these markets thanks to its price advantage. Even Vietnamese pangasius enterprises have the opportunity to expand their market share not only in the EU but also in Korea and Japan due to the US sanctions and the domino effect taking place in many related markets.

Tran Van Cong, Agricultural Counselor of Vietnam in Europe, also assessed that the group of Vietnamese fruit and vegetable products still has a great deal of room in the EU. Each year, the European market imports about US$120 billion of fruits and vegetables, accounting for 40% of the total global import and export turnover of fruits and vegetables. However, Vietnam's fruit and vegetable export turnover to Europe only reached about US$190 million, accounting for a very small proportion compared to the European market share being imported. In particular, fruit juice and frozen juice products are popular in Europe, because people in this region tend to consume green and have a high demand for nutritious and healthy foods, and plant products to replace animal products.

According to Cong, recently, large-scale enterprises with modern production technology have done well in processing products to penetrate the European market. Therefore, Vietnam can completely access the European market with frozen and canned vegetables and fruits.

Dealing with exchange rates

Besides the concern about inflation, the exchange rate is also a challenge for businesses. In particular, the strengthening of the USD against other foreign currencies is causing mixed impacts on Vietnamese enterprises. Talking to Customs News, most of the exporting enterprises said that they were not affected by the depreciation of foreign currencies such as EUR and Japanese Yen, because most of the enterprises signed payment contracts in USD. Even when converting into VND, businesses also benefit from the appreciation of the USD.

As an enterprise with a large export turnover to Europe, Phan Minh Thong, Chairman of Phuc Sinh Group said, although not adversely affected by the depreciation of the EUR, in the long run, the company may also be affected when the "health" of importers here weakens.

Nguyen Van Sang, Director of Vietnam Goods Import-Export Joint Stock Company (Viet Products), is even concerned that the difficult business situation will cause importers to ask for a discount. On the other hand, many argue that the decline of the EUR will make Vietnamese goods exported to Europe more expensive and more difficult to compete with goods of other countries in this market.

In the opposite direction, importing enterprises with payment in USD must incur additional costs when the exchange rate increases. Therefore, Vu Duc Giang recommends businesses actively transform and diversify the supply of domestic raw materials to take the initiative in delivery time and save transportation costs.

On the other hand, this context also opens up some opportunities. Than Duc Viet, General Director of Garment 10 Corporation, said that businesses should take advantage of the weakening EUR to import goods, machinery and equipment from Europe at good prices.

By Nguyen Hien/ Huu Tuc

Related News

Agricultural, forestry and fishery product exports reached US $ 29.2 billion in the first half of the year

Agricultural, forestry and fishery product exports reached US $ 29.2 billion in the first half of the year

VCN - In the first six months of the year, total export turnover of agricultural, forestry and fishery products reached US $29.2 billion, up 19% over the same period in 2023.
Rubber exports grows sharply in June

Rubber exports grows sharply in June

VCN - According to Import – Export Tax Department (Ministry of Industry and Trade), Vietnam's rubber exports in June 2024 reached about 150 thousand tons, worth 238 million USD, up 77.6% in volume and 76.6% in value. Price compared to May 2024.
Exports fruit and vegetable expects to exceed US$ 7 billion

Exports fruit and vegetable expects to exceed US$ 7 billion

VCN - In the first half of 2024, fruit and vegetable export turnover reached nearly US$3.5 billion. Key markets recorded an increase of 10-50% over the same period in 2023. This is also the industry that holds the leading position in exports of agricultural products.

Latest News

FTA - support to promote pangasius export

FTA - support to promote pangasius export

VCN - The implementation of FTAs ​​always creates favorable conditions for businesses to expand and diversify markets, bringing Vietnamese seafood, including pangasius, to participate deeperly into the global production and supply chain.
Vietnam - France trade reached nearly US$2.5 billion in the first half of the year

Vietnam - France trade reached nearly US$2.5 billion in the first half of the year

VCN - France is Vietnam's leading trade partner in Europe with bilateral turnover reaching billions of US$/year.
Technology increases competitiveness in the logistics race

Technology increases competitiveness in the logistics race

VCN - In the context that the logistics industry in Vietnam is forecast to continue to grow strongly, many businesses are actively applying technology and expanding service chains to take advantage of opportunities and keep pace with the general trend.
MoIT proposes key solutions to cope with rising sea freight prices

MoIT proposes key solutions to cope with rising sea freight prices

The Ministry of Industry and Trade (MoIT) has requested local associations and businesses to coordinate implementing key solutions to promote imports and exports as sea freight rates rise.

More News

Vietnamese seaports to handle 1.2-1.4 billion tonnes of cargo by 2030

Vietnamese seaports to handle 1.2-1.4 billion tonnes of cargo by 2030

Vietnam's seaport cargo throughput is set to reach 1.2-1.4 billion tonnes by 2030, with container cargo expected to range from 46.3 to 54.34 million TEUs, according to a detailed plan for the development of seaport groups, wharfs, jetties, buoy berths, and water areas in 2021-2030, with a vision to 2050.
Binh Dinh seeks investment opportunities from Germany, France

Binh Dinh seeks investment opportunities from Germany, France

A delegation from the south central province of Binh Dinh led by Permanent Vice Secretary of the provincial Party Committee Le Kim Toan paid a working trip to Germany and France to explore investment opportunities from July 17-22, reported the provincial Department of Planning and Investment.
Warnings as HRC steel imports continue to increase rapidly

Warnings as HRC steel imports continue to increase rapidly

The amount of imported hot-rolled coil steel in the first six months of this year increased sharply to an alarming level, 1.7 times higher than domestic production.
MoIT warns about international trade fraud

MoIT warns about international trade fraud

Trade experts said that the number of cases was increasing and taking place in all markets from Africa, the Middle East, India to developed countries such as the US, the Netherlands, and Italy.
Enterprises self- renovate to promote exports to the Central region

Enterprises self- renovate to promote exports to the Central region

VCN - Opportunities to cooperate and promote the export of products of Central region enterprises directly into foreign distribution networks and effectively participate in the global production value chain... are assessed to have a lot of potential.
Corporate culture "lighting the way" for sustainable development

Corporate culture "lighting the way" for sustainable development

VCN - The government aims to cultivate and develop numerous business leaders capable of heading strong economic conglomerates by 2030, leveraging their roles to lead and pave the way. To achieve this goal, financial strength alone is not enough; a robust foundation in business culture is essential.
The fast-moving consumer goods industry aims for green and sustainable development

The fast-moving consumer goods industry aims for green and sustainable development

VCN - Vietnam's consumer goods industry currently has the fastest growth rate in the ASEAN region. However, for sustainable development in the future, businesses in the fast-moving consumer goods industry need to aim for green consumption.
Stronger “medicine” needed to help businesses overcome difficulties

Stronger “medicine” needed to help businesses overcome difficulties

Businesses have suggested the Government maintain its support to help them overcome difficulties, recover production and business activities, and promote growth, given the fact that many of them still face difficulties despite the country’s GDP growth rate of 6.42% in the first half of this year.
Insiders optimistic about durian export to China

Insiders optimistic about durian export to China

Insiders believe in a bright prospect for durian export to China though the world’s largest durian consumer is expanding the cultivation of this fruit.
Read More

Your care

Latest Most read
FTA - support to promote pangasius export

FTA - support to promote pangasius export

VCN - According to the Vietnam Association of Seafood Exporters and Producers (VASEP), the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) is considered an important step for the seafood industry to "take off", in which there
Vietnam - France trade reached nearly US$2.5 billion in the first half of the year

Vietnam - France trade reached nearly US$2.5 billion in the first half of the year

France is Vietnam's leading trade partner in Europe with bilateral turnover reaching billions of US$/year.
Technology increases competitiveness in the logistics race

Technology increases competitiveness in the logistics race

VCN - Logistics plays an important role in the entire process from social production, import and export, circulation and distribution to consumption, creating added value, making an increasingly greater contribution to promoting the growth of the country'
MoIT proposes key solutions to cope with rising sea freight prices

MoIT proposes key solutions to cope with rising sea freight prices

The Ministry of Industry and Trade (MoIT) has requested local associations and businesses to coordinate implementing key solutions to promote imports and exports as sea freight rates rise.
Vietnamese seaports to handle 1.2-1.4 billion tonnes of cargo by 2030

Vietnamese seaports to handle 1.2-1.4 billion tonnes of cargo by 2030

Vietnam's seaport cargo throughput is set to reach 1.2-1.4 billion tonnes by 2030, with container cargo expected to range from 46.3 to 54.34 million TEUs, according to a detailed plan for the development of seaport groups, wharfs, jetties, buoy berths, and water areas in 2021-2030, with a vision to 2050.
Mobile Version