Each year, Aprocimex, a company operating in agriculture sector, has to import nearly $25 million worth of goods for manufacturing materials, therefore foreign exchange rate fluctuations are a huge concern.
Despite rapid increases in the exchange rate with about 1.6 percent since June, the company has not been affected by the fluctuation as it has prepared its financial plan.
Doan Trong Ly, Chairman of Aprocimex Import-export and food processing Joint Stock Company said: "Reasonably high or low exchange rate will not effect enterprises, but if it varies from 2- 3 percent then enterprises have to recalculate their financial resources."
Importing nearly $1.3 million worth of materials, Viettrust JSC, however, estimated it may suffer a loss of nearly $22,000 due to exchange rate differences. However, thank to Usance payable at sight Letter of credit (LC Upas), the company can save half of the loss.
After signing the contract, the bank, on behalf of the company will make payment for the company’s partners in foreign currencies. This amount will be converted to Vietnamese dong and the enterprise will be charged in Vietnamese dong, therefore an decrease or increase in exchange rate will not hugely impact enterprises.
Tran Van Son, Chairman of Viettrust JSC told reporters: "Late payment is usually applied for importing goods, our debt is in USD, if the exchange rate increases, we will suffer losses, but if the debt in Vietnamese dong, our business activity will be more stable."
Firms should also take the initiative in expanding markets and exporting goods to foreign markets as it can help increase profits for enterprises.