Prices stay high after dollar decline

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Although dollar values have fallen sharply recently, most traders in imported products have not reduced their prices accordingly, citing increased operation costs and other factors.

Some retailers said the products currently on their shelves were imported when dollar prices were high. Others claimed transport employee salaries and other costs have also increased, so price reductions are not possible.

The US dollar was quoted at around VND20,850 on Thursday at commercial banks, well below the record high of VND22,200 it reached on February 18.

The recent weakening of the dollar in Vietnam has been attributed to a central bank move that capped interest rates on dollar deposits. Individuals and companies have since said US$10 million to $15 million a day to banks, the government said recently in a statement.

Nguyen Khanh Vinh, manager of Le's Mart in Hanoi, said most of the market's suppliers increased their prices months ago, citing the dollar hike. However, when the dollar dropped, none of them announced any reduction in prices.

"We have asked them to reduce prices, but they have not yet replied," he said. "Obviously, high prices have reduced the purchasing power of customers. In the context of high inflation, they will be more careful with their spending."

Nguyen Thu Ha, the owner of a confectionery shop in Hanoi's Dinh Cong Street, said the prices of milk, beverages and sweets have increased by 5-25 percent since early this year when dollar prices began rising.

"But now, traders still cannot force distributors to reduce their prices, because they cite increasing material prices, transportation costs and employee salaries," she said.

The failure of imported goods prices to fall despite a cheaper dollar is very common in the market. The prices of food, mobile phones, laptops and other electronic products have seen no price reduction.

Le Thi Nhung, the owner of a mobile phone shop on Truong Dinh Street, resorted to the same excuses as others. "Products we are currently selling were imported in February, and because we stock a large inventory, we have not imported more products and cannot reduce prices."

Some businesses do report a decrease in prices, but they also maintain that the dollar has nothing to with it.

Dao Duy Kha, deputy general director of Vietnam Plastic Corporation, said, "The decline in dollar value has reduced difficulties for enterprises, but the benefits are far outweighed by the burdens of higher interest rates and transportation costs."

He said most plastic materials sold in the market now were imported several months ago when dollar prices were high. Therefore, sellers would not ordinarily cut their prices, but they have been forced to do so to sell out their inventory since the prices of imported materials began to fall many weeks ago.

Retail prices have also fallen because demand for plastic materials has dropped as firms cut back on production to cope with the "current difficult situation," he said.

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