Market prices fluctuate on dong depreciation

The domestic market has noted sharp changes after the central bank adjusted up the inter-bank rate by 9.3% and narrowed the trading band for the dong to 1% from 3% previously, reporting many commodity prices up strongly while others remained unchanged.

Cooking gas jumped in prices right after the adjustment became effective Friday. Cooking gas prices rose by between VND17,000 and VND19,000 per 12-kilo and 13-kilo cylinder respectively on the following day.

Explaining the price hikes, the enterprises said they calculated gas prices on bank forex rates. This is the second price revision of the product within the past 12 days after local firms suddenly cut cooking gas prices by VND20,000 per 12-kilo cylinder early this month as global gas prices tumbled.

Do Trung Thanh from the business department of Saigon Petro said the company had earlier calculated gas prices at banks’ foreign exchange rates, at VND19,500 to the dollar, although it still bought dollars at VND21,000 on the unofficial market. “We have to revise up prices following the banks’ forex rates,” Thanh said.

Meanwhile, prices of some electronic and cooling products remained stable as supermarkets and stores had already calculated prices at forex rates on the unofficial market.

Representatives of many retailers, especially supermarkets, said their suppliers had yet to make any price adjustments. They hoped that the suppliers would not raise product prices now as they still calculated their price according to the forex rates on the unofficial market. Demand for goods will drop markedly now that Tet has finished and retailers still have huge stocks of goods.

However, retailers said price hikes would occur within the next one or two months for both locally-made and imported products due to high demand and material price rises on the world market.

Similarly, some local automakers and importers had yet to increase sales prices despite the dong depreciation but were considering a rise soon. Auto manufactures such as Toyota Vietnam, Honda Vietnam, Ford Vietnam as well as authorized importers Euro Auto and BMW late last week announced that their car prices were unchanged, mainly because trade was slow at present.

This month reported poor revenues for the local auto market because consumers had bought cars before the Lunar New Year holidays, or Tet. Auto demand always decreases after Tet, car dealers said.

However, local experts and car dealers said that automakers and importers would increase retail prices in the future as customers would convert car prices into Vietnam dong using the banks’ forex rates.

In addition, nearly all automakers in Vietnam now import spare parts. So, prices of finished cars will certainly be higher, experts said.

Financial analysts also forecast a decrease in auto imports during the upcoming months since cars will become more expensive in Vietnam. – SGT

Tags: Vietnam dong devaluation