Listed firms suffer huge currency losses in H1

Specifically, Novaland, with USD loans amounting to over 17.9 trillion VND (721 million USD), suffered exchange rate losses of 834 billion VND in the first half of the year, while Vietnam Airlines, with US dollar loans converted to more than 6.1 trillion VND, faced losses of 1.2 trillion VND.

Bamboo Capital Group incurred losses of 129 billion VND, PV POWERP lost 178 billion VND, Mobile World Investment Corporation experienced losses of 146 billion VND, PC1 Group lost 112 billion VND and Hoa Phat Group registered losses of 229 billion VND.

On the other hand, some enterprises still experienced positive performance in exchange rate.

FPT Corporation (FPT) reported an exchange rate profit of 141 billion VND, Petrovietnam Technical Services Corporation with a profit of 136 billion VND, Petrovietnam Ca Mau Fertiliser gained 49 billion VND, Hoa Sen Group reported a profit of 231 billion VND, Nam Kim Group has a profit of 73 billion VND and Vicostone (VCS) saw a profit of 43 billion VND.

In the first half of 2024, the non-financial group saw a notable improvement in revenue, with a 14% increase in net revenue compared to the same period.

This growth was primarily fuelled by a strong recovery in sales volumes, particularly in sectors like aviation and industrial services, retail and steel.

During the period, profit margins rose by 20%, largely attributed to lower input material prices reducing inventory costs, as well as improved selling prices in industries such as steel, retail, fertilisers and chemicals and telecommunications.

While interest expenses decreased significantly, they were offset by exchange rate losses and other financial costs.

Improving outlook

However, the US Dollar Index (DXY), gauging the greenback's strength against a basket of six major currencies, experienced a significant decline in July and early August due to weaker-than-expected US economic indicators.

This was fuelled by a 0.2% increase in CPI in July after posting a 0.1% decrease in June. The CPI rose 2.9% year-on-year.

Core PCE, the US Federal Reserve's preferred inflation measure, saw only a 0.1% uptick from the previous month and a 3.3% gain from the previous year.

Meanwhile, non-farm payroll growth in the US plummeted to 114,000 in July from the revised figure of 179,000 in June, with the unemployment rate climbing to 4.3%, marking the highest level since October 2021.

Following the release of lackluster employment figures, the DXY dropped below the 103 threshold before experiencing a slight rebound.

Also weighed on the greenback, markets are pricing in about a 63.5% chance of a 25-basis points US rate cut in September and a 36.5% chance of a 50-basis points cut, according to the CME FedWatch tool.

The significant drop in the DXY has helped ease the USD/VND exchange rate.

As of August 26, the exchange rate has decreased by 2.3% compared to June 30. On August 28, the official exchange rate broke below the 25,000 VND per dollar threshold.

BSC said that the ongoing reduction in interest expenses will continue to support business performance growth in the third and fourth quarters of 2024, as exchange rate losses are projected to decrease alongside the stabilisation of exchange rates.

Given the unexpected drop of the exchange rate below 25,000 VND, VNDirect now anticipates that the rate may trend towards this level from now until the year's end.

By contrast, Dragon Capital Securities (VDSC) said that the USD/VND exchange rate has declined faster than anticipated due to the weakening of the US dollar.

The expected resurgence in US dollar demand in the end of third quarter and the start of fourth quarter is expected not to weigh on the exchange rate outlook.

However, the brokerage firm expected that by the end of 2024, the USD/VND rate could hover around 25,000 VND per dollar, up around 3% from the previous year.