The total export volume in 2010 is forecast to reach USD 63-64 billion compared to $56.6 billion in 2009.
The depreciation of both U.S dollar and euro has had negative impacts on exports to USA and the European markets. Although the exchange rate policy has proved effective at maintaining an equal rate between the exchange rate quoted by the state bank and the black-market rate, exporting businesses have still worried about the devaluation of foreign currencies.
The dong/euro forex rate has been hovering around 22.893 (the buying rate) and 23.253 which has been continuously declining for the last five days. The buying and selling US dollar price listed at commercial banks is ranging around 18,950 dong and 19,000 dong per US dollar respectively one week after a 10-dong decline. There has not by far a significant change in the forex rate particularly when commercial banks have an abundant US dollar source not only to sell to enterprises and individuals but to the State bank of Vietnam as well. However, surplus US dollar earned from gold exports is likely to pave the way for a downward trend in foreign currencies.
The euro alone has marked a depreciation of 15 percent from the beginning of the year. Volatile forex rate has stroke a blow to many export items in that several export enterprises exporting to Europe have to re-negotiate with their partners, otherwise they would suffer high losses. With such fall over the first five months, each shirt exported, which is worth 5 euro, is estimated to lose 0.5-0.7 euro. Equally important is weakening demand from the exporting markets, which further puts them at a disadvantage.
Continuous downward trend
It is reckoned that exports are enjoying a bright future considering the export volume in June estimated at more than $6 billion, up 14.4 percent against the previous month and 37.5 percent year-on-year. By far, the export volume is estimated at $25.8 billion, a 12.6 percent year-on-year increase with domestic sector at $12 billion, up 0.4 percent, foreign invested sector at $13.8 billion, up 25.9 percent (including crude oil) and $11.7 billion, up 39.1 percent (excluding crude oil).
Almost all export items (excluding coffee) have recorded an increase in unit price with cashew up 19.3 percent, pepper up 33.4 percent, rice up 8.4 percent, and tea up 7.5 percent and rubber up 91.1 percent. Textile and garment sector, footwear sector, seafood sector, wood and wooden products exports earned $3.8 billion in unit prices (up 17.1 percent), $1.8 billion (up 7.7 percent), $1.6 billion (up 18 percent) and $1.2 billion (up 31.1 percent) respectively.
Despite the prospect of export industries, some experts expect the US dollar/euro forex rate to maintain a sharp fall in the end of the year when the debt crisis in Europe continues to hang heavy over the world economy. The current rate of 1.2 is anticipated to slip to 1.06, which makes US dollar a far more effective and reliable method of payment.
Businesses are stepping up on borrowing with forex lending in the first five months increasing tenfold to 25 percent compared to the dong lending growth of 2.45 percent over the late 2009 period. The relatively stable forex rate together with attractive lending rate encourages more borrowings especially in US dollar.
The volatility of the European economy has stemmed from the debt crisis which led to the depreciation of euro over US dollar. In addition, the continuous depreciation of these two key foreign currencies in Vietnamese export payment has make Vietnam’s exports suffer.
Nonetheless, US dollar is still more secured even for exports to markets outside the Europe. Businesses therefore should focus on markets that barely suffer from the euro depreciation.