Wednesday,  Oct 24, 2018,04:10 (GMT+7) 0 0
Vietnam currency seen stable this year
The Saigon Times Daily
Friday,  Jan 26, 2018,00:05 (GMT+7)

Vietnam currency seen stable this year

The Saigon Times Daily

File photo of a bank teller counting Vietnamese banknotes. The exchange rate between the U.S. dollar and the Vietnam dong is seen stable this year - PHOTO: UYEN VIEN

HCMC - Strong remittance inflows, rising foreign exchange reserves and anti-dollarization efforts will help stabilize the exchange rate between the U.S. dollar and the Vietnam dong this year, according to news website An Ninh Tien Te.

In a report on the economic outlook in 2018, the National Financial Supervisory Commission (NFSC) said the weak U.S. dollar made the dollar-dong exchange rate relatively stable last year. In late 2017, the USD Index dropped by 9.1% compared to early 2017 although the U.S. Federal Reserve (Fed) had hiked interest rates several times.

Besides, the interest rate differential between Vietnam dong and U.S. dollar was kept at a high level of 6-7% and foreign currency mobilization increased by only 4% compared to end-2016.

According to NFSC, a large amount of foreign currency was sold or changed into Vietnam dong. Large trade surplus, rising foreign direct investment, consumer optimism and macroeconomic stability also helped the State Bank of Vietnam (SBV) boost foreign exchange reserves to a record high of 54.5 billion.

Financial expert Huynh Trung Minh said despite the Fed’s rate hikes, the weak U.S. dollar has played an important role in stabilizing the foreign currency market in Vietnam.

Bui Quang Tin, an expert in banking and finance, was quoted by the news website as saying that the Fed’s rate hikes last year were foreseen because the world’s largest economy expanded an impressive 2.2% the same year and unemployment dropped to 4.1%, the lowest in 10 years. Therefore, the Fed’s upcoming rate hikes, if any, would have little impact on the Vietnam dong.

Data of the World Bank shows remittances to Vietnam increased about 16% in 2017 to an estimated US$13.8 billion, the highest in five years.

SBV has restricted foreign currency loans and kept the foreign currency deposit interest rate at 0%. If the Fed raises interest rates this year, the U.S. dollar would strengthen. The dollar-dong exchange rate would increase slightly by 1.5-2%, giving Vietnamese companies an export advantage.

According to Vietcombank Securities Company (VCBS), the nation’s higher foreign exchange reserves will enable SBV to stabilize the foreign exchange market and keep interest rates low. VCBS forecast the Vietnam dong value compared to the U.S. dollar will drop by no more than 2% this year.

Standard Chartered has forecast the exchange rate between the dollar and the dong would be VND22,650 per dollar in the second quarter and VND22,600 at the end of 2018.

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