Yuan adjustment yet to affect firms

Vietnam Steel Association Vice Chairman Nguyen Van Sua said the 0.54% adjustment would not affect steel exporters, who sell insignificant quantities of products to the Chinese market.

The adjustment might cause import prices to rise but it would not affect steel import volumes from China, which account for up to 60% of Vietnam's total steel imports, he said.

He noted, however, that domestic firms would have to continuously cut costs and improve product quality to enhance competitiveness right in the home market.

Vietnam Fertiliser Vice Chairman Nguyen Hac Thuy said enterprises in this sector, especially major firms such as Phu My, Ca Mau and Ninh Binh, were operating well with sufficient supplies.

While the companies were able to meet domestic demand and serve their exports, insignificant fertiliser imports from China could hardly affect local businesses, he said.

However, he urged authorities to tackle units that produce fake and low quality fertilisers, which are damaging both, enterprises and farmers.

Hung Yen Garment Corporation General Director Nguyen Xuan Duong said that as local garment and textile companies usually imported materials from China to serve their production for exports, the adjustment of the yuan would not affect the companies as they would gain when exporting their finished products.

The appreciation would only impact importers producing materials, such as those importing cotton to manufacture threads, or chemicals to dye cloth, he said.

Dap Cau Garment JSC Chairman Luong Van Thu said all of its existing orders with Chinese partners were contracted in US dollar, so they would not be affected by the yuan fluctuation.

But he warned that the depreciation of the currency would eventually have an impact on domestic firms, since China is a power in exporting garment production materials.

Phan Thi Thanh Xuan, general secretary of the Vietnam Leather, Footwear and Handbag Association, said companies in this area were also insignificantly influenced by the Chinese currency fluctuation, with US dollar contracts.

While firms were cautiously observing the unpredictability in exchange rates, any clear currency impacts on their business would be exposed early next year, she said.

"In the long run, we need to have more suitable modes of production and use more materials made domestically, or made in other countries rather than China," Xuan said.

"This is not a new issue, but enterprises should make a note of it to adapt to global policy changes in the future, especially with regard to the Chinese market," she added.

Vietnam Cassava Association Vice Chairman Nguyen Minh Tien said exporters in this industry would also see little impact from China's monetary adjustment, as China was still a major importer of Vietnamese cassava.

China, the world's second largest economy adjusted the yuan's mid-rate upwards by 0.54% against the US dollar on Monday.

This is the largest currency adjustment by the country in a decade, just three months after its surprise devaluation sent shockwaves through global markets.