>>State bank official: Exchange rate adjustment is necessary
>>Exchange rate on US dollar damages Vietnam’s profits
After the State Bank of Vietnam decided to devaluate the dong by 9.3 percent, of the price of many essential goods such as gas, steel and dairy products have increased sharply.
The prices of petrol, electricity and electronics are believed to go up soon.
Prices on the rise
Gas is considered very “sensitive” to the dong/dollar exchange rate.
Therefore, no one was surprised at the gas price increase of VND17-18,000 per 12-kilo cylinder.
Tthe exchange rate adjustment was announced in the morning of February 11, and the gas traders increased the gas price in the afternoon of the same day.
Do Trung Thanh from Saigon Petro says that the gas price increased because of the higher dollar. Vietnam now has to import gas, for which it pays in dollars.
Therefore, when the dollar becomes more expensive, the gas price increases accordingly. Just several days after the exchange rate adjustment, steel mills also raised their prices.
The Vietnam Steel Corporation (VNSteel) and Pomina have raised the sale prices of their products by VND300-400,000 per ton. VNSteel is selling rolled steel at VND16.467 million per tonne, and bar steel at VND16.797 million per tonne (spot deliveries).
Meanwhile, Pomina brand steel is trading at 17.3 million dong per tonne. Explaining the price increases, steel producers say that the world price of ingot steel has increased by USD50-60 per tonne to USD650-660 per tonne.Besides, the exchange rate adjustment has also contributed to the increase.
The prices of dairy products have also escalated. Representatives of well known brand names such as Friso, Ensure or Similac have announced 8-10 percent price increases, as of February 16.
Ensure milk powder, for example, has seen the price increase from VND474,000 to VND521,000 per 900 gram box, while Similac is selling at VND204,000 instead of VND183,000 per 400 gram box, and the price of Friso has increased from VND337,000 to VND350,000.
Prior to that, in early 2011, Vinamilk and Mead Jonhson also announced the 7-12 percent price increases. With the price adjustment, Dielac Alpha Step 123 powder milk of VInamilk is selling at VND153,000, while Enfa Mama A+ Vanilla, Enfa Mama A+ Chocolate now cost VND139,000.
Price increases of other products expected
To date, the suppliers of electronics and household goods have not announced any increases, but observers believe that they will be made in some days.
A representative from Pico home appliance supermarket, says that though the central bank has adjusted the exchange rate, the supermarket chain has not raised its sale prices, because it signed contracts with producers and suppliers late last year at the old prices.
However, the executive say that the prices of refrigerators and electronics will certainly increase once retailers import products under new contracts.
The price increases will be about 5-10 percent. However, while big supermarkets and retail chains keep the prices unchanged, private run electronics shops in Hanoi have all raised the retail prices by 10 percent right after the exchange rate adjustment.
Analysts warn that the price increases are unavoidable, especially when the prices of other key products such as coal, electricity and petrol will increase in late February and early March.
The Ministry of Industry and Trade has submitted to the Prime Minister three proposals for the electricity price increases. Experts believe that the 18 percent price increase will be approved.
The Ministries of Finance and Industry and Trade have revealed that they may allow petroleum importers to raise petrol retail prices.
