Vietnam's key export sectors to benefit from rising USD/VND exchange rate

Vietnam’s export sectors such as seafood, chemicals, oil and gas, plastics, textiles, wood, and tires are expected to benefit from the rising price of USD, according to securities brokers.

In its latest currency market report, MB Securities (MBS) highlighted that uncertainties related to “Trump 2.0” could drive further appreciation of the USD.

The VND depreciated about 5.03% against the U.S. dollar in 2024, according to Dao Minh Tu, SBV Deputy Governor.

This depreciation was largely driven by the U.S. Federal Reserve’s decision to maintain interest rates at their highest level in 23 years, combined with a surge in demand for USD to support raw material imports and speculative stockpiling, according to the broker.

MBS forecasts that the exchange rate will fluctuate between VND25,500 and 25,800 per USD in Q1/2025. This will likely be influenced by fiscal loosening plans under the new U.S. government, stricter immigration policies, high U.S. interest rates relative to other countries, and a higher level of protectionism in the U.S., all of which are expected to support further appreciation of the USD in 2025.

According to BIDV Securities (BSC), several export sectors are set to benefit from the ongoing exchange rate trend. These include seafood, chemicals, oil and gas, plastics, textiles, wood, and tires.

The seafood industry will benefit as most seafood products are priced and traded in USD, while the chemical sector is expected to perform well as export revenue constitutes a significant portion of earnings, while raw material imports are relatively small, said BSC.

The oil & gas and plastics sectors are also projected to see positive results due to their export-heavy revenue streams.

While textile companies are expected to benefit from the rising price of the USD, the impact may be limited since most of them still rely on imported raw materials to meet customer specifications.

The artificial quartz industry stands to gain from exchange rate differentials, as revenue growth is expected to outpace interest expense increases.

The tire industry, with a large portion of export revenue and lower raw material imports, is also likely to benefit from the rising exchange rate trend.

The wood sector is expected to be one of the biggest beneficiaries, as a large portion of its products are exported to the U.S. and Europe, bringing in USD, while raw materials are primarily sourced domestically.

However, BSC points out that some sectors are likely to face pressure from the trend. For example, fertilizer companies like Petrovietnam Fertilizer & Chemicals Corporation (DPM) and Petrovietnam Ca Mau Fertilizer JSC (DCM) could encounter challenges, as their raw materials are priced in USD, but their export revenue is relatively small.

Meanwhile, certain utility companies, with gas prices denominated in USD, could see higher production costs, reducing their competitiveness compared to other energy sources, the broker forecasts.

BSC also takes a neutral stance on sectors such as steel, rice, and technology. Specifically, for FPT Corporation, BSC believes that the increase in the USD/VND exchange rate will be offset by a decrease in the JPY/VND exchange rate.

Additionally, since FPT’s USD-denominated loans are repaid directly from its U.S. revenue, the overall impact on its business results is expected to be minimal.