English
Vietnam’s foreign reserves hit $64 billion
The Hanoitimes – Vietnam’s foreign reserves has surged by 130 percent to nearly US$64 billion in the past two-and-a-half years, Prime Minister Nguyen Xuan Phuc said.
At a recent group meeting of the National Assembly on socio-economic affairs, Phuc said the exchange rate has been also stable and inflation has kept under control.
Experts attributed the stability to reasons such as the State Bank of Vietnam (SBV)’s flexible central rate management mechanism, which ensured that the domestic foreign exchange market was less affected by global factors.
In addition to this, the domestic supply-demand relationship with the dollar was relatively stable thanks to foreign currency supply from exports, foreign investment, official development assistance, tourism and remittances.
SBV affirmed it would continuously try to build up the country’s foreign reserves this year to cushion external shocks, besides supporting efforts to stabilize the forex market.
Fitch recently also forecast that Vietnam’s foreign reserves would increase to about $66 billion by the end of this year from $49 billion in 2017, while general government debt is likely to decline to below 50 percent of gross domestic product by 2019.
The rating agency also upgraded the rating on Vietnam’s long-term, foreign currency-denominated debt one level to BB, with a stable outlook. The upgrade puts Vietnam at the second-highest speculative grade and on par with Costa Rica.
Experts have also been optimistic about the foreign exchange market in 2018, noting that the market would be stable, with VND devaluing slightly by some 0.5-1 percentage points to VND22,710-VND22,950.
According to the Bank for Investment and Development of Vietnam’s capital and monetary research division, the country’s overall balance of payment can maintain a healthy surplus of some $8-10 billion this year, which is important for the stability of the forex market.
This year, SBV has changed its way of purchasing foreign currency. Instead of using spot trade, the central bank has used futures contracts for the purchase of hard currencies since February 7 this year.
Previously, the bank bought foreign currency in spot trade, with volumes reaching $1-3 billion per day, meaning that an equivalent volume of Vietnamese dong was pumped into the market in a short time.
But since February, the bank has launched three-month futures contracts to regulate the flow in a more flexible way. Some 40 percent of the foreign reserves have been purchased through futures contracts, helping to balance cash flows to moderate the pressures on interest rates, USD/VND exchange rate and inflation.
On Wednesday, SBV set the daily reference exchange rate at VND22,584 per dollar, down by VND11 against the previous day.
With the current trading band of +/- three per cent, the ceiling rate applied to commercial banks during the day is VND23,261 per dollar and the floor rate is VND21,907 per dollar.
Major commercial banks, such as Vietcombank, on Wednesday listed the USD/VND exchange rate unchanged from the previous day, buying the greenback at VND22,735 and selling it at VND22,805.
Last week, commercial banks devalued the dollar against the local currency by VND2.4 on average, listing the dollar at VND22,766.4. Meanwhile, the daily reference exchange rate quoted by SBV increased by VND2 to VND22,568.
The week saw the USD Index rise by 0.9 percent against other major currencies of EUR, JPY, GBP, CAD, SEK, CHF to 93.45 points.
Last year, SBV also successfully made a net purchase of $13 billion, raising the forex fund to $53 billion, the highest ever.
Bloomberg reported last year that the Vietnamese currency was one of the most stable currencies in Asia in 2017.
In addition to this, the domestic supply-demand relationship with the dollar was relatively stable thanks to foreign currency supply from exports, foreign investment, official development assistance, tourism and remittances.
SBV affirmed it would continuously try to build up the country’s foreign reserves this year to cushion external shocks, besides supporting efforts to stabilize the forex market.
Fitch recently also forecast that Vietnam’s foreign reserves would increase to about $66 billion by the end of this year from $49 billion in 2017, while general government debt is likely to decline to below 50 percent of gross domestic product by 2019.
The rating agency also upgraded the rating on Vietnam’s long-term, foreign currency-denominated debt one level to BB, with a stable outlook. The upgrade puts Vietnam at the second-highest speculative grade and on par with Costa Rica.
Experts have also been optimistic about the foreign exchange market in 2018, noting that the market would be stable, with VND devaluing slightly by some 0.5-1 percentage points to VND22,710-VND22,950.
According to the Bank for Investment and Development of Vietnam’s capital and monetary research division, the country’s overall balance of payment can maintain a healthy surplus of some $8-10 billion this year, which is important for the stability of the forex market.
This year, SBV has changed its way of purchasing foreign currency. Instead of using spot trade, the central bank has used futures contracts for the purchase of hard currencies since February 7 this year.
Previously, the bank bought foreign currency in spot trade, with volumes reaching $1-3 billion per day, meaning that an equivalent volume of Vietnamese dong was pumped into the market in a short time.
But since February, the bank has launched three-month futures contracts to regulate the flow in a more flexible way. Some 40 percent of the foreign reserves have been purchased through futures contracts, helping to balance cash flows to moderate the pressures on interest rates, USD/VND exchange rate and inflation.
On Wednesday, SBV set the daily reference exchange rate at VND22,584 per dollar, down by VND11 against the previous day.
With the current trading band of +/- three per cent, the ceiling rate applied to commercial banks during the day is VND23,261 per dollar and the floor rate is VND21,907 per dollar.
Major commercial banks, such as Vietcombank, on Wednesday listed the USD/VND exchange rate unchanged from the previous day, buying the greenback at VND22,735 and selling it at VND22,805.
Last week, commercial banks devalued the dollar against the local currency by VND2.4 on average, listing the dollar at VND22,766.4. Meanwhile, the daily reference exchange rate quoted by SBV increased by VND2 to VND22,568.
The week saw the USD Index rise by 0.9 percent against other major currencies of EUR, JPY, GBP, CAD, SEK, CHF to 93.45 points.
Last year, SBV also successfully made a net purchase of $13 billion, raising the forex fund to $53 billion, the highest ever.
Bloomberg reported last year that the Vietnamese currency was one of the most stable currencies in Asia in 2017.
Source: http://www.hanoitimes.vn/economy/2018/05/81E0C744/vietnam-s-foreign-reserves-hit-64-billion/