Taiwanese businesspeople need to pay attention to rising interest rates and fluctuating currency exchange rates while investing in Vietnam, Citibank officials said yesterday.
"Amid strong foreign direct investment inflows, Vietnam has been forced to face the challenge of developing its supportive infrastructure," said Gautam Hazarika, Citibank's director of fixed income, currencies and commodities in the Asia-Pacific region.
"However, Taiwanese companies should be alert to the risks of a volatile Vietnamese dong currency and interest rates in the future," Hazarika said.
As Vietnam's inflation rate hit a 12-year high last month, surging 15.7 percent year-on-year, Hazarika said he expected the Vietnamese government to reduce the money supply in the economy by raising its interest rates.
Nonetheless, as it is equally important for the Vietnamese government to manage its inflation and economic growth, Faisal Ameen, Citibank's head of Vietnam for the network relationship banking team and the global transaction services teams, said he expected the inflation rate in Vietnam to remain as high as 10 percent this year.
Hanoi has been trying to broaden its foreign currency trade band ever since Vietnam joined the WTO in November 2006 and Citibank said the massive capital inflow into the country will result in increased foreign exchange liberalization and a more volatile foreign exchange rate environment.
Citibank said export-oriented foreign investors in Vietnam should hedge on a basket of currencies to avoid the risk of receiving less dong for every US dollar when the dong appreciates.
Citibank said Taiwanese companies should also be aware that the trading in Vietnam is restricted to those between the dong and other foreign currencies. That means dong-NT dollar transactions have been done in two parts.
"Since the Vietnam dong and the NT dollar are both restricted currencies, [trading between] the Vietnam dong and the US dollar has to be done in Vietnam, while the NT dollar and the US dollar has to be done in Taiwan," Hazarika said.
Citibank said Taiwan is one of the biggest investors in Vietnam, with more than 1,500 investment projects and US$7,935 million registered capital.
Many of the projects are from Taiwan's small and medium-sized enterprises, it said.
When an apartment comes up for rent in Germany’s big cities, hundreds of prospective tenants often queue down the street to view it, but the acute shortage of affordable housing is getting scant attention ahead of today’s snap general election. “Housing is one of the main problems for people, but nobody talks about it, nobody takes it seriously,” said Andreas Ibel, president of Build Europe, an association representing housing developers. Migration and the sluggish economy top the list of voters’ concerns, but analysts say housing policy fails to break through as returns on investment take time to register, making the
‘SILVER LINING’: Although the news caused TSMC to fall on the local market, an analyst said that as tariffs are not set to go into effect until April, there is still time for negotiations US President Donald Trump on Tuesday said that he would likely impose tariffs on semiconductor, automobile and pharmaceutical imports of about 25 percent, with an announcement coming as soon as April 2 in a move that would represent a dramatic widening of the US leader’s trade war. “I probably will tell you that on April 2, but it’ll be in the neighborhood of 25 percent,” Trump told reporters at his Mar-a-Lago club when asked about his plan for auto tariffs. Asked about similar levies on pharmaceutical drugs and semiconductors, the president said that “it’ll be 25 percent and higher, and it’ll
NOT TO WORRY: Some people are concerned funds might continue moving out of the country, but the central bank said financial account outflows are not unusual in Taiwan Taiwan’s outbound investments hit a new high last year due to investments made by contract chipmaker Taiwan Semiconductor Manufacturing Co (TSMC, 台積電) and other major manufacturers to boost global expansion, the central bank said on Thursday. The net increase in outbound investments last year reached a record US$21.05 billion, while the net increase in outbound investments by Taiwanese residents reached a record US$31.98 billion, central bank data showed. Chen Fei-wen (陳斐紋), deputy director of the central bank’s Department of Economic Research, said the increase was largely due to TSMC’s efforts to expand production in the US and Japan. Investments by Vanguard International
WARNING SHOT: The US president has threatened to impose 25 percent tariffs on all imported vehicles, and similar or higher duties on pharmaceuticals and semiconductors US President Donald Trump on Wednesday suggested that a trade deal with China was “possible” — a key target in the US leader’s tariffs policy. The US in 2020 had already agreed to “a great trade deal with China” and a new deal was “possible,” Trump said. Trump said he expected Chinese President Xi Jinping (習近平) to visit the US, without giving a timeline for his trip. Trump also said that he was talking to China about TikTok, as the US seeks to broker a sale of the popular app owned by Chinese firm ByteDance Ltd (字節跳動). Trump last week said that he had
RSS