Exchange-rate risks are discouragingmost enterprises from taking out US dollar-denominated loans, despitethe rising costs of borrowing in Vietnamese dong.
Lending rates for dollar loans from commercial banks currently rangefrom 5.5 to 8 percent per year, compared to a whopping 16-19 percentper year in negotiated rates for medium-to long-term dong loans.
“The difference between the two is huge, about 10 percent,” saidAsia Commercial Bank deputy director Nguyen Thanh Toai. “So, it isquite understandable that a number of enterprises are borrowing indollars.”
But dollar loans are also harder to come by. Most lenders only takeexporters and major borrowers into consideration for such loans.
And most enterprises contacted by Vietnam News said that exchange raterisks were sometimes spookier to them than high interest rates.
“We have borrowed 400,000 USD at 6.5 percent to import machines,”said Duc Viet Foods Co general director Mai Huy Tan. “The interest isendurable now, but exchange-rate risks remain an ongoing concernbecause it’s something we can’t gauge for ourselves.
“We only borrow dollars minimally,” said Asian Food Co generaldirector Nguyen Van Tan, who complained that foreign exchangefluctuations had already caused the renegotiation of some contracts andmade Vietnamese goods less competitive on international markets.
The central bank has depreciated gradually the Vietnamese dong againstthe US dollar by over 10 percent since the beginning of 2009 and onedollar now costs about 19,000 VND through commercial banks and 19,250VND on the black market.
A senior State Bank of Vietnam official, who asked to remain unnamed,told Vietnam News, “We definitely want to stabilise the rate to supportbusinesses and that’s what we are trying to do. But it’s really a bigquestion because exchange-rate policy has to consider other economicfactors like the wide trade deficit, smaller foreign investment capitalinflows and inflationary pressures./.
Lending rates for dollar loans from commercial banks currently rangefrom 5.5 to 8 percent per year, compared to a whopping 16-19 percentper year in negotiated rates for medium-to long-term dong loans.
“The difference between the two is huge, about 10 percent,” saidAsia Commercial Bank deputy director Nguyen Thanh Toai. “So, it isquite understandable that a number of enterprises are borrowing indollars.”
But dollar loans are also harder to come by. Most lenders only takeexporters and major borrowers into consideration for such loans.
And most enterprises contacted by Vietnam News said that exchange raterisks were sometimes spookier to them than high interest rates.
“We have borrowed 400,000 USD at 6.5 percent to import machines,”said Duc Viet Foods Co general director Mai Huy Tan. “The interest isendurable now, but exchange-rate risks remain an ongoing concernbecause it’s something we can’t gauge for ourselves.
“We only borrow dollars minimally,” said Asian Food Co generaldirector Nguyen Van Tan, who complained that foreign exchangefluctuations had already caused the renegotiation of some contracts andmade Vietnamese goods less competitive on international markets.
The central bank has depreciated gradually the Vietnamese dong againstthe US dollar by over 10 percent since the beginning of 2009 and onedollar now costs about 19,000 VND through commercial banks and 19,250VND on the black market.
A senior State Bank of Vietnam official, who asked to remain unnamed,told Vietnam News, “We definitely want to stabilise the rate to supportbusinesses and that’s what we are trying to do. But it’s really a bigquestion because exchange-rate policy has to consider other economicfactors like the wide trade deficit, smaller foreign investment capitalinflows and inflationary pressures./.
