USD exchange rate increases - Businesses still have difficulty accessing capital
After the State Bank of Vietnam (SBV) decided to adjust the exchange rate by 9.3%, effective from February 11, 2011, many people predicted that the supply of USD would be more abundant due to the reduction of foreign currency hoarding. However, through actual research, some businesses in the province said that it was still difficult to access USD at the listed price of the bank.
After the State Bank of Vietnam (SBV) decided to adjust the exchange rate by 9.3%, effective from February 11, 2011, many people predicted that the supply of USD would be more abundant due to the reduction of foreign currency hoarding. However, through actual research, some businesses in the province said that it was still difficult to access USD at the listed price of the bank.
Implementing Resolution No. 02/NQ-CP on key solutions to direct and implement the 2011 socio-economic development plan and to increase liquidity in the foreign exchange market, the State Bank of Vietnam has adjusted the average interbank exchange rate to 20,693 VND/USD and narrowed the trading band from +- 3% to +- 1%.
At the same time, the State Bank will operate the average interbank exchange rate relatively flexibly in the coming time. These measures will create conditions for proactive exchange rate management, in accordance with the foreign currency supply and demand situation, ensuring increased market liquidity, contributing to curbing trade deficit and supporting the implementation of a more proactive and flexible monetary policy.
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Commercial banks are short of USD to sell to businesses. |
For businesses, the increase in exchange rate is something they have predicted. However, the difficulty for businesses is that the difference between the State Bank's exchange rate and the free exchange rate is very high. Mr. Truong Van Hien - General Director of Nghe An Agricultural Materials Joint Stock Company said: The State Bank adjusted the average interbank exchange rate to 20,693 VND/USD.
But in reality, our business cannot buy at that listed price, but must negotiate daily with commercial banks. The current purchase price is 21,300 VND/USD.
Thus, the difference between the listed price of the State Bank and the agreed purchase price is 400 - 500 VND/USD. As a large fertilizer importer and producer in the province, the enterprise always needs a large amount of USD to pay for imported goods, but currently buying USD is not convenient. If buying in the free market, the current price is nearly 23,000 VND/USD. Thus, it is very difficult for enterprises in production and business, high input costs, inevitably pushing up the selling price and in the end the one who has to bear the brunt is the consumer.
Mr. Bui Thanh Chung - General Director of Vietnam - Laos Economic Cooperation Investment Joint Stock Company shared: USD exchange rate has increased, the company does not dare to import goods, each import batch needs 20,000 USD to pay. Banks can only meet 50-60% of businesses' demand for USD but the response is very slow, not all businesses can buy immediately when needed. Businesses importing goods are extremely difficult, USD has increased but goods prices have not increased, they do not dare to sell, while having to pay high interest rates on loans.
It is clear that businesses are suffering double losses. For businesses, we have determined that 2011 is an extremely difficult year, we do not dare to invest. Unfinished investment plans must also be scaled back. Export units sell USD at a higher price than the State Bank's listed price, so commercial banks that buy at a higher price cannot sell to businesses at the State Bank's regulated price. That is the reality that businesses have to face.
Meanwhile, free USD is always ready to respond with appropriate exchange rates. USD of the free market is actually also from export, through banks and then flows into the market. The cost of USD increases because of many rounds, causing damage to businesses. That difference causes loss of transparency in payment, causing damage to the State in tax loss.
Banks are also short of USD to meet the needs of businesses. Deputy Director of the Provincial Agricultural Bank - Mr. Phan Duc Tien also said: the bank does not have USD to sell to businesses. Currently, the Agricultural Bank has mobilized 22 million USD, really wants to lend but no customers have borrowed USD yet.
Regarding this issue, many businesses shared: No importer dares to borrow USD, because when importing goods, waiting for them to sell out, then buying USD to pay off bank debt, at that time if the USD price increases, the business will lose more money so they do not dare to take the risk.
In fact, the State Bank does not have much USD, currently only enough to meet the demand for importing essential goods. People who have USD do not want to sell to banks at this time because they still expect the exchange rate to increase further. But with the exchange rate that the State Bank has just adjusted to increase by 9.3%, with a strong adjustment rate, narrowing the amplitude, it will be difficult for it to increase further.
Therefore, businesses should not be too worried and USD holders should not expect the exchange rate to continue to increase. During this period, it is thought that the management and operation role of the Government should send out messages of stability, which will create peace of mind for businesses and people.
Enterprises should boldly borrow USD and those who have USD should not hoard it anymore, to create conditions for enterprises to access USD. Only then can capital circulate, create more material values for the economy and give workers more job opportunities.
Quynh Lan
