Listed firms suffer huge currency losses in H1

A customer conducts a foreign currency transaction at a banking office. — VNA/VNS Photo

HÀ NỘI — Numerous listed-companies that have borrowed big loans in US dollars reported substantial currency losses in the first half of 2024, data from BSC Securities showed.

Specifically, Novaland, with US dollar loans amounting to over VNĐ17.9 trillion (US$721 million), suffered exchange rate losses of VNĐ834 billion in the first half of the year, while Vietnam Airlines, with US dollar loans converted to more than VNĐ6.1 trillion, faced losses of VNĐ1.2 trillion.

Bamboo Capital Group incurred losses of VNĐ129 billion, PV POWERP lost VNĐ178 billion, Mobile World Investment Corporation experienced losses of VNĐ146 billion, PC1 Group lost VNĐ112 billion and Hòa Phát Group registered losses of VNĐ229 billion.

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

FPT Corporation (FPT) reported an exchange rate profit of VNĐ141 billion, PetroVietnam Technical Services Corporation with a profit of VNĐ136 billion, PetroVietnam Cà Mau Fertiliser gained VNĐ49 billion, Hoa Sen Group reported a profit of VNĐ231 billion, Nam Kim Group has a profit of VNĐ73 billion and Vicostone (VCS) saw a profit of VNĐ43 billion.

During the first half of 2024, the non-financial group saw a notable improvement in revenue, with a 14 per cent 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 per cent, 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 per cent increase in CPI in July after posting a 0.1 per cent decrease in June. The CPI rose 2.9 per cent year-on-year.

Core PCE, the US Federal Reserve's preferred inflation measure, saw only a 0.1 per cent uptick from the previous month and a 3.3 per cent 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 per cent, 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 per cent chance of a 25-basis points US rate cut in September and a 36.5 per cent chance of a 50-basis points cut, according to the CME FedWatch tool.

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

As of August 26, the exchange rate has decreased by 2.3 per cent compared to June 30. On August 28, the official exchange rate broke below the VNĐ25,000 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 VNĐ25,000, 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/VNĐ 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/VNĐ rate could hover around VNĐ25,000 per dollar, up around three per cent from the previous year.