Greenback surge appears a mixed bag for Vietnam businesses

As expected, the recent surge in the U.S. dollar against the Vietnamese dong (VND) has benefited exporters handsomely while importers are feeling the pinch of paying more for their purchases.

The State Bank of Vietnam (SBV), the country’s central bank, raised its mid-point USD/VND exchange rate Friday by VND360 from several days earlier to VND24,260 a dollar. Since early this year, the rate has risen 1.7%.

State-controlled Vietcombank, the largest forex trader in the country, quoted the greenback at VND25,133 and VND25,473 for buying and selling. VietinBank, one of Vietnam’s “Big 4” lenders, offered the dollar at VND25,150 and VND25,473. Notably, the dollar was offered on the black market at VND25,500 and VND25,700.

The exchange rate at commercial banks has depreciated nearly 5% from end-2023, higher than the annual target of 3%.

The depreciation has heaped benefits on exporters, especially those in textiles, seafood, rubber, rubber and farm produce.

Le Tien Truong, chairman of the Vietnam National Textile & Garment Group (Vinatex), said the industry's competitive edge had eased from the second half of 2022 to 2023 when the VND remained relatively stable while Chinese and Indian currencies depreciated sharply.

BIDV Securities JSC, listed on the Ho Chi Minh Stock Exchange as BSC, named several listed exporters that have benefited from the rising dollar, including seafood exporter Vinh Hoan Corporation (HoSE: VHC), seafood processing firm Nam Viet Corporation (HoSE: ANV), and pangasius exporter International Development & Investment Corporation I.D.I (HoSE: IDI).

Phu Tai JSC (HoSE: PTB) has reported positive gains from its export of wood and stone to the U.S. and Europe. Duc Giang Chemicals Group JSC (HoSE: DGC) has gained by having a significant portion of its revenue come from exports while minimizing expenditure on imported raw materials.

Textile exporters including TNG Investment and Trading (HoSE: TNG), Thanh Cong Textile Garment Investment Trading JSC (HoSE: TCM), SaigonTex (HoSE: STG), and Hoa Tho Textile & Garment JSC (HoSE: HTG) have capitalized on the dollar surge.

Meanwhile, a number of importers like the Petrovietnam Fertilizer and Chemicals Corporation (HoSE: DPM), PetroVietnam Camau Fertilizer JSC (HoSE: DCM), and PetroVietnam Power Nhon Trach 2 JSC, have felt the sharpness of the pinch corresponding to the amount of input materials they’ve had to purchase with the greenback.

Tran Dinh Long, chairman of steelmaker Hoa Phat Group (HoSE: HPG), said at the AGM earlier this month that the strengthening of the greenback hurt the company, which had to set aside some VND200 billion ($7.86 million) in provisions for forex rate fluctuations. This was because HPG imported materials while its products are sold mainly domestically, and it has outstanding foreign loans.

Some firms have managed to balance revenue and expenditure to experience minimal impacts from the exchange rate hikes. These include FPT Corporation (HoSE: FPT), REE Corporation (HoSE: REE), PC1 Group JSC (HoSE: PC1), Gia Lai Electricity JSC (HoSE: GEG), and Bamboo Capital JSC (HoSE: BCG), BSC analysts noted.

According to the General Statistics Office, Vietnam’s exports climbed 17% year-on-year to $93 billion in the first quarter of 2024. The uptick was seen across the sectors of agriculture-fisheries-forestry, manufactured goods and mineral fuels, the GSO said.