Depending on partners
A HCM City-based enterprise which specializes in importing cars and car parts, said that diversifying the payment currencies proves to be the “impossible mission” for it.
The company imports cars under the mode of complete built units (CBU) from Germany. However, the German exporters request the company to make payment in the US dollar, and do not accept the euro, even though Germany is a member of the Eurozone. Even if the company wants to import spare parts from the German manufacturers’ factories in China, it is also requested to make payment in dollars.
The same situation is occurring with Vietnamese exporters. In most cases, foreign partners are the ones who have the right to choose the currencies of payment. The director of a branch of Eximbank revealed that its clients always borrow in dollars, because they get dollars from foreign partners for the export consignments, no matter if the exports go to Europe, Africa or China.
Dang Binh Minh, Director of a farm and forestry product export company in Ben Tre province, said that in general, the two parties agree to make payment in the US dollar. Only when the currency fluctuates by five percent or more in prices will the company have the right to suggest another currency for payment, or require charging additional fees.
Of course, Vietnamese traders do not want to rely on the US dollar as the only foreign currency used in making payment. However, “the spirit is willing, but the flesh is weak”.
“In most export transactions, the foreign partners always highly appreciate the liquidity of the payment currency and the popularity of the currency. The factors are even more appreciated than the low prices of products, Minh said.
“If considering the liquidity and the popularity of the currencies, it is clear that the US dollar remains the top choice,” he added.
Hard foreign currencies also bring high risks
However, if even foreign partners agree to let Vietnamese exporters and importers to choose the currencies for payment, Vietnamese enterprises would still choose the US dollar.
Will another non-dollar currency help Vietnamese enterprises minimize risks? An expert believes that in case of making payment in the euro, reminbi or Japanese yen, the risks would even be higher.
According to the expert, “choosing the euro for payment at this moment can be seen as an action of committing suicide.” The public debt crisis has pushed many nations in Europe against the wall, which has led to the sharp depreciations of the euro.
Meanwhile, using the Japanese yen also proves to be a bad choice. Vietnamese businesses have learned the lesson from the Pha Lai Thermopower Plant Company, which had incurred the loss of 1 trillion dong due to the yen/dong exchange rate fluctuation in the fourth quarter of 2008, because the yen appreciation has made the company’s loan increase.
In fact, some experts have pointed out that making payment in Japanese yen would bring benefits to Vietnamese enterprises, especially at this moment, when the yen value has made a record increase so far, even though the domestic purchasing power has not fully recovered after the tsunami and nuclear crisis in March 2011.
However, it is undeniable that the dong/yen exchange rate fluctuates more heavily than the dong/dollar exchange rate, and this is one of the reasons that makes both banks and businesses refuse to make payment in non-dollar currencies.
The Governor of the State Bank of Vietnam has committed to stabilize the dong/dollar exchange rate, and the any adjustment of the exchange rate, if it is made, will not lead to the depreciation of more than one percent by the end of the year.
Source: Dien dan DN
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