As the Dong depreciates less against the USD, which "big guys" will have less headaches due to exchange rate losses?

Exchange rate cools down, businesses with large debts in USD have less worries - Photo: QUANG DINH

Exchange rate cools down

Pressure on Vietnam’s exchange rate eased significantly in August thanks to a significant weakening of the US dollar. The USD index (DXY) is now at over 100.7 points - the lowest level in more than a year.

In the recent meeting, the Fed chairman confidently declared the US victory in the fight against inflation and believed that it was time to adjust policy. Currently, the market is leaning towards the possibility that the Fed will cut the USD interest rate in September.

According to the update as of August 31, the USD buying price at banks has dropped to 24,660 VND, which means an increase of only 2.3% compared to the beginning of this year and a decrease of more than 2.5% since the peak.

The exchange rate on the free market also dropped sharply to 25,240 VND/USD, only up 2% compared to early 2024.

Ms. Tran Thi Khanh Hien - Director of MB Securities Research (MBS), believes that exchange rate pressure will cool down and fluctuate between 24,800 - 25,000 VND/USD in this fourth quarter.

In addition to the advantages of the Fed's interest rate cut, Ms. Hien also pointed out domestic factors supporting the exchange rate. For example, the positive trade surplus, FDI capital inflows and strong recovery of tourism.

"The stability of the macro environment is likely to be maintained and further improved, which will be the basis for stabilizing the exchange rate in 2024," Ms. Hien predicted.

	Exchange rate profit/loss
VIC	-4068
NVL	-834
AGG	61
FPT	141
PVD	-93
PVS	136
GAS	-141
BSR	-49
VJC	12
BCG	-129
POW	-178
BWE	-73
GEX	-106
PC1	-112
MWG	-146
HPG	-229
HVN	-1224

Exchange rate impact on business profits in the first 6 months of 2024 - Data: BSC

When the exchange rate cools down, it is most obvious that businesses with USD loans will have less pressure. According to BSC Securities analysts, pre-tax profits in the first 6 months of this year of businesses have been strongly affected by the exchange rate.

BSC statistics also show that many large businesses with USD loans have recorded "huge" exchange rate losses in the first half of 2024. When the exchange rate decreases, the most obvious thing is that the pressure of exchange rate losses for these businesses will be reduced.

For example, as of June 30, 2024, Novaland (NVL) had a USD loan value equivalent to VND 17,927 billion, with an exchange rate loss in the first 6 months of this year of up to VND 834 billion.

Or Vietnam Airlines borrowed USD worth 6,117 billion VND, causing an exchange rate loss of up to 1,224 billion VND. In addition, some electricity or steel companies such as POW, Gex, HPG... all recorded exchange rate losses of hundreds of billions of VND.

Why still need to be "cautious"?

Although the VND/USD exchange rate has gradually cooled down since the end of July, many experts are still cautious when forecasting this macro index in the coming time.

According to analysts from Fiinratings, pressure on exchange rates may return in the coming time under the impact of domestic and foreign factors.

Among these, international factors include the US economic outlook, the need to hoard USD in the face of geopolitical risks around the world...

Domestically, USD demand also often increases more strongly at the end of the year due to the need to import input materials for year-end export orders.

However, Fiinratings still believes that production costs and foreign capital costs will decrease. Enterprises that depend on foreign currency sources such as import and export will directly benefit from reduced input costs.

Regarding exchange rates, Ms. Nguyen Thi Phuong Lam, director of analysis at Dragon Viet Securities (VDSC), also noticed some pressure on foreign currency supply and demand.

Accordingly, the demand for USD often increases in the late third quarter and early fourth quarter due to the need to import machinery and raw materials to serve year-end export orders.

Based on the prospect of the USD maintaining relative strength and the pressure on foreign currency demand returning, VDSC experts believe that the path to exchange rate stability may still have a "bumpy" path ahead.

Accordingly, this securities company's expert gave two scenarios for exchange rates. In which, the base scenario for the USD/VND exchange rate in the interbank market could increase to 25,500 VND/USD and decrease back to 25,300 VND/USD by the end of the year.

A more optimistic scenario occurs if both of the above pressures are controlled, then the exchange rate could fall to 25,000 VND/USD by the end of the year.

Source: https://tuoitre.vn/tien-dong-bot-mat-gia-truoc-usd-dai-gia-nao-se-bot-dau-dau-vi-lo-ti-gia-20240902191311046.htm