Specifically, domestic importers like Nhon Trach 2, Bim Son Cement JSC, and Ha Tien I Cement JSC that previously applied to euro-denominated deposits and loans experienced major distress as the soaring price of euro multiplied their interest expenses from VND billions to dozens of billions.
To date, a substantial number of domestic firms that imported commodities from Europe were reported to raise their commodity prices due to the volatility of the euro.
In contrast, according to statistics provided by the General Department of Vietnam Customs (GDVC), Vietnam’s total commodity export volume to the EU was estimated at over $38 billion, equivalent to 14 per cent of gross domestic export sales.
Nguyen Ton Quyen, vice chairman and general secretary of Vietnam Timber and Forest Product Association (VIFORES), stated that Vietnam’s total exports of wood forest products achieved nearly $700 million in 2017 and is expected to escalate to around $800 million by the end of 2018.
“The volatility of the euro would only have a minimal impact on wood products trade as the majority of exporting agreements with EU-based companies are denominated in US dollars,” Quyen added.
Likewise, the exports of fisheries and aquaculture products to the EU stood at roughly $1.3 billion, leading the domestic markets in sales revenue. Exporting firms such as Vinh Hoan, Sao Ta, and Hung Vuong made vast contributions to the growth of the domestic aquaculture market by obtaining dozens of millions of dollars of sales revenue.
According to recent surveys on the trade situation between domestic exporting firms and the EU, around 30 per cent of domestic firms applied the euro as the base currency in their contracts. The remaining firms denominated the US dollar as the base currency, which minimised the impact of the euro on general exporting business.
The Euro’s global price spiraled out of control: a 2 per cent rise in the first three weeks of 2018 and a 14 per cent rise over the year of 2017. Likewise, in the domestic market, the Euro skyrocketed by 16 per cent in 2017 and 5 per cent over the first two weeks of 2018.