VietNamNet Bridge – The stabilizing of the dong/dollar exchange rate over the
last two years has made the local currency depreciate by 20 percent, which has
hindered exports.
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Stabilized exchange rate blocks exporters’ way
An official of the Vietnam Association of Seafood Exporters and Producers (VASEP)
complained that catfish exporters have been facing difficulties from all four
sides. Especially, he said, the stable dong/dollar exchange rate has made it
unable to boost exports in the context of the weak global demand.
Dr. Nguyen Duc Thanh, Director of the Economics and Policy Research Center, an
arm of the Hanoi National University, said while the nominal exchange rate has
been kept unchanged over the last two years, the inflation rate has been staying
firmly high, which means that the dong has quietly appreciated against the
dollar.
Thanh said the local currency has been overvalued, which has hindered the export
of many key products of Vietnam, including catfish.
“Some experts say the exchange rate has in no way affected the export. However,
I believe that the stabilized exchange rate can be compared with a noose, which
has been gradually tightening businesses’ neck,” Thanh said.
“The exchange rate stabilization has weakened exporters, while they should have
been supported to boost exports,” he added. “The fact that catfish processing
enterprises are now on the verge of bankruptcy shows that problems are existing
in macroeconomic policies.”
Dr. Le Xuan Nghia, a well-known economist, also thinks that the dong has been
appreciated by 20-21 percent higher against the dollar and 3-4 percent against
the other 19 currencies from the countries with which Vietnam has trade
relations.
“This has put Vietnam’s exports at a disadvantage,” Nghia said.
Dong/dollar exchange rate should be adjusted in 2013
Experts all think that it is quite within the reach of the State Bank of Vietnam
to stabilize the exchange rate in 2013. However, they have warned that if the
exchange rate stays unchanged for too long, it would cause big difficulties to
the national economy which has been relying on exports.
Trinh Quang Anh from Maritime Bank said on Dau tu that the exchange rate
stabilization in the whole year 2012 would put a heavy burden on businesses in
2013. He said Vietnam’s export in the last six months of the year was severely
hurt; therefore, the State Bank needs to consider the exchange rate adjustment.
Dien dan Doanh nghiep has quoted an expert as saying that the dong should be
devalued by two or three percent in order to ensure the competitiveness for
Vietnam’s exports.
However, some other economists disagree, saying that the depreciation of the
dong would bring more harm than good.
Nguyen Bich Lam, Deputy Head of the General Statistics Office, said though
Vietnam’s economic growth heavily depends on export, Vietnam also imports
products in big quantities. As such, when depreciating the dong, Vietnam would
suffer because the sums of money it has to pay for imports would be much higher.
“It would be okay if one dong worth of imports would bring one dong worth of
exports. But if the figure is smaller, this means that the more we export, the
bigger loss we incur,” Lam explained.
In 2000-2008, the ratio was always 1. However, since 2009, the ratio has always
been lower than 1. “This means that devaluation of the dong would not benefit
the national economy,” he said.
Compiled by C. V