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Vietnam hardly affected by euro depreciation   2010-06-14 - Saigon tiep thi

Financial analysts believe that the euro’s depreciation has not had a big influence on Vietnam, because most of Vietnamese import-export companies are using dollars for making payments.


The euro has lost 20 percent of its value since the beginning of 2010. In May 2010, one euro converted into $1.238, but now one euro is equal to $1.2.


The euro/dong exchange rate was at 22,822-23,090 dong/euro late last week. The euro has lost its value by 400 dong from May and 4000 dong per euro in comparison with the beginning of 2010


There are no official statistics about the proportion of the transactions that use euros in payment, but financial experts believe that 90 percent of the transactions use dollars, while the remaining 10 percent use other hard currencies, including the euro.


Eximbank is a bank that uses many kinds of foreign currencies for payments. The bank’s Deputy General Director Dao Hong Chau commented that most enterprises that use Eximbank’s services still prefer the dollar for payments. He added that the number of transactions using the dollar still accounts for 85-90 percent of total transactions. People also do not keep euros unless they really have demand.


Pham Hong Hai, a senior executive of Hong Kong and Shanghai Banking Group HSBC, also reported that many export companies use the dollar as payment currency, so they have not suffered from the euro’s depreciation.


According to Hai, economists have predicted that the euro price would drop further towards the end of the year to 1.1-1.15 dollar per euro.


The depreciation of the euro has benefited Vietnamese individuals who need euros to pay for tourism, health care and overseas studies in Europe.


The depreciation has also prompted investors to buy euros in large quantities, hoping to sell later when the prices rise. The owner of a gold shop in HCM City knows clients who bought some tens of thousands of euros when the price was 24,890 dong in February. They were shocked that the euro price continued to decline and had to sell out in mid-May, losing hundreds of millions of dong.


One bank director responded that people like investing in the euro instead of the dollar, because the euro allows them to make bigger profit, thanks to the wider gap of purchasing and sale prices. The difference is 300-400 dong per euro, while the gap is just 10-20 dong per dollar.

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