Foreign exchange rate poised to go up in Q4
By Thanh Thuong - The Saigon Times Daily
HCMC – The U.S. dollar/Vietnam dong exchange rate has remained stable over the past months but it will go up in the last quarter of the year, according to speakers at a roundtable of the CEO Club in HCMC on Wednesday.
Speaking at the gathering, deputy general director Pham Hong Hai of HSBC Vietnam said it is unlikely for the rate to maintain the current stability in the near future. Hai attributed his prediction to ongoing global and local economic uncertainties.
If Greece, Italy and Spain withdraw from the euro zone as feared, the situation will certainly leave adverse impacts on foreign exchange rates between the local currency and the greenback, Hai clarified.
According to Hai, dong is considered the most stable currency in the world in the year to date but this will certainly change, especially in the present microeconomic slump. Hai, however, said the fluctuation will not be strong thanks to the central bank’s timely interventions in recent times.
Previously, the central bank had only intervened in the foreign exchange market if the gap of the rates between the unofficial and official market widened to 3-5%. But the monetary authority is doing the job in a timely manner, tending to stabilize the rate via commercial banks or foreign reserves upon any volatility, he pointed out.
Hai said the forex rate in the next three months will be hovering around the current level of VND20,850 to the dollar, but it will surge in the last quarter given rising U.S. dollar demands and falling dong interest rates expected at the year-end.
Those enterprises intending to borrow U.S. dollars need to take the scenario into account, Hai suggested.
Meanwhile, Tran Du Lich noticed the forex stability is being put at risk because of a foreseeable positive outlook for the local economic recovery, with more materials and machinery imported to meet production expansion demands. Lich believed such as situation will push up the nation’s trade deficit which was recorded at about US$685 million in the six-month period, equivalent to only 10.6% of that in the year-ago period, putting higher pressure on exchange rates. Therefore, the rates in late 2012 and early 2013 will be volatile for sure, Lich added.
The national foreign reserves have gone up strongly over the last six months, with the central bank purchasing an additional US$9 billion. The current foreign reserves are some US$20-21 billion, meaning the central bank has a strong vehicle to control the forex market in line with its policies.
There is a high possibility that the forex rate will mark up 2-3% this year as declared by governor Nguyen Van Binh, Hai said, adding his bank predicted one U.S. dollar will be priced at VND21,500 late this year and at roughly VND21,700 early next year.