Forex rate coming into focus

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The director of a big seafood export company said exchange rate was a decisive factor to export firms’ profitability. 

Thereby, the trading band being loosened by at least 2-3 per cent this year would promote upbeat export figures.

Higher exchange rate would contribute a fine share to the company’s profits, according to a Ho Chi Minh City-based Thang Loi International Garment source.

From the bank part, deputy general director of the city’ Orient Commercial Bank (OCB) Pham Linh said export firms generally wanted exchange rate hike but unlike previously they currently did not prefer hoarding dollars.

In reality, export firms now often sell their foreign currency incomes to banks instead of holding on their accounts as in the past.

State Bank of Vietnam (SBV) Governor Nguyen Van Binh revealed the target of keeping the exchange rate stable not surging over 2-3 per cent this year to help firms hold initiative in settling production and business plans.

The inter-bank average rate and SBV exchange rate would be managed in a way to ensure stability in the rest of the year, Binh noted.

According to the SBV, slightly increasing exchange rate in the past weeks, particularly after the SBV lifted the exchange rate by 1 per cent, mainly came from ‘psychology’ factor. Besides, higher trade deficits in the recent months also put pressures on the rate.

Commenting on exchange rate situation in the first six months, as well as in the rest of 2013 a member of the National Financial and Monetary Policy Council Dr. Tran Du Lich said stable exchange rate would not mean keeping the rate fixed since if it was pegged at a certain low level in a long time, it could not spur export and domestic localisation. Therefore, Dr. Lich suggested upwardly revising the [dong-dollar] exchange rate by at least 3 per cent this year.

“To reach fairly good inflation level as it is until now, the Vietnamese government has exercised tightening monetary policies. However, too tightened policies would badly influence the aggregate supply and business performance,” Lich said.