Businesses flexibly navigate exchange rate fluctuations

Grasping, forecasting, and taking appropriate preventive measures have helped many businesses mitigate shocks from exchange rate fluctuations. Photo: Internet

Risks still loom

Recent actions by the State Bank of Vietnam, such as withdrawing VND from the interbank market through the issuance of bills, selling foreign currency on the spot, and pushing the interbank VND interest rate to approximate the USD interest rate, have supported the stabilization of the exchange rate at its current threshold. Accordingly, the USD has increased by nearly 5% against the VND since the beginning of 2024.

However, observations indicated that this trend did not yet show stability as the exchange rate has still seen slight increases in recent days. As of the morning of May 22, the central rate announced by the State Bank of Vietnam was VND24,254, up VND3 from the previous day, marking the third consecutive increase since the beginning of the week. At commercial banks, the USD continued to rise, with a range of VND3-10 compared to the previous session. The selling price hovered around VND/US$25,466, while the buying price ranged from VND/US$25,170 - 25,166, with a buy-sell gap of about VND200 - 300.

An analysis report by ACBS Securities Company suggested that the pressure on the exchange rate had not been completely alleviated but was not expected to be too intense in the near future. The main reason is the reduced interest rate differential, which will stimulate FDI enterprises and exporters to sell their USD reserves. However, the trade surplus is showing signs of declining as imports accelerate. Therefore, maintaining a positive trade surplus with an appropriate VND interest rate will support the exchange rate equation.

Various ways to mitigate exchange rate "shocks"

The high exchange rate has affected import costs, causing significant difficulties for businesses when importing raw materials amid ongoing challenges in output markets. Nguyen Dang Hien, General Director of Tan Quang Minh Production and Trading Co., Ltd., noted that the import prices for aluminum for bottle caps and fruit flavorings have increased. In response, the company has continuously reviewed production processes and cut costs to avoid raising sales prices. Specifically, the company strives to minimize material wastage, streamline equipment and machinery, and reduce communication and distribution costs.

Nguyen Anh Tuan, Deputy General Director of Colusa - Miliket Food Corporation, stated that the company always forecasted and reserved raw materials to minimize the impact of sudden price increases. However, facing input cost pressures, the company plans to increase sales prices by 3-5%, accompanied by support programs for agents and stores. The company also continues to review and improve production equipment and invest in new technology to reduce energy consumption.

Meanwhile, companies with USD-denominated loans have also devised strategies to avoid risks from exchange rate fluctuations. At Long Son JSC, Vu Thai Son, Chairman and General Director, shared that the rising exchange rate significantly increased the import costs of cashew kernels. However, the increased exchange rate benefited the company when exporting cashew kernels. Therefore, overall, the company was not negatively affected by the exchange rate. Notably, at the beginning of the year, Son decided to convert all USD loans to VND, helping the company avoid risks from the rising USD.

Similarly, Masan Group Corporation, which has USD-denominated debt amounting to billions of USD, has effectively hedged against exchange rate risks. Specifically, since the end of 2023, Masan has successfully hedged 100% of its long-term USD debt with reasonable terms through currency swaps. As a result, US$950 million in principal was converted to VND at an exchange rate of VND23,937 VND with a fixed interest rate of 8.93%. Additionally, Masan conducted interest rate swaps combined with forward foreign exchange transactions for US$45 million in principal repayments in 2024 at an exchange rate of 24,005 and US$300 million with a fixed interest rate of 6.48% per year for a five-year term at an exchange rate of 23,790 for one year.

Mới đây, Masan cũng đã hoàn tất đợt huy động vốn cổ phần trị giá 250 triệu USD từ Bain Capital, quỹ đầu tư tư nhân hàng đầu thế giới, với tổng tài sản quản lý xấp xỉ 180 tỷ USD. Masan đã nhận 6.228 tỷ đồng tiền mặt thuần từ khoản đầu tư này, giúp cải thiện đáng kể bảng cân đối kế toán của công ty.

Thanks to such appropriate solutions, while many businesses faced soaring financial costs from USD-denominated capital in Q1/2024, Masan confirmed that the recent USD appreciation did not significantly impact the company's consolidated profits. Specifically, Masan's consolidated revenue for Q1/2024 saw a slight growth to VND18,855 billion, and net profit attributable to minority shareholders doubled compared to Q4/2023.

Recently, Masan also completed a US$250 million equity fundraising round from Bain Capital, a leading global private investment fund with approximately US$180 billion in assets under management. Masan received VND6,228 billion in net cash from this investment, significantly improving the company's balance sheet.