VietNamNet Bridge - The depreciation of the euro against the greenback amid a struggling European economy has begun to worry Vietnamese exporters.

The euro has declined to a 12-year low. On March 16, one euro was equivalent to US$1.0451, with a loss of 25 percent of value over the last year.

 

Like the other exporters specializing in exporting products to European markets, Vu Quang Thanh, director of the HCM City-based Thanh Hai Food Processing Company, complained that his company still had not signed contracts for the year because of euro price fluctuations.

“We are still negotiating new contracts,” Thanh said. “The European partners have been very slow in replying to our proposal. The euro price fluctuations could be a reason behind the tardiness.”

As Thanh is not sure if he can sign contracts with European partners, he is trying to look for new clients in the US, Japan, South Korea and the Middle East.

Nguyen Thi Anh, chair of Song Tien Seafood, said the company’s European catfish importers had informed him that they would place orders if Song Tien agreed to lower the prices.

However, Anh cannot slash the selling price, saying that the catfish export price has been at a low of $2.6 per kilo, and that a drop of 10-12 penny per kilo would be enough to bring losses. 

The catfish price in the domestic market is now at VND23,500 per kilo. Anh said she needs three kilos of materials to make one kilo of filet.

“As we cannot sell at a loss, we decided to refuse many orders, accepting the high inventory,” Anh said.

In order to reduce input costs, Song Tien has been farming fish. It is now time for harvesting, but the company still does not have export contracts.

“We still have to harvest and process fish now, hoping to sell fish later when it can go for a good price. This is the optimal solution for us now,” she said.

The euro price fluctuations are important as European countries are Vietnam’s major export markets.

Garment and footwear exporters have complained that their European partners have insisted on price decreases. 

Truong Thi Thuy Lien, director of Lien Phat Company, said her partners had asked to reduce prices by over 10 percent. 

The director of a shoe company in Binh Duong Province said that European partners had only signed short-term (six-month) contracts instead of long-term ones for fear of currency-price fluctuations.

TBKTSG