Vietnam would not consider using the USD/VND exchange rate as a tool to boost exports, but taking into account a bigger picture, including imports and macro-economic balance, according to Dao Minh Tu, deputy governor of the State Bank of Vietnam (SBV), the country’s central bank.

“An adjustment to the exchange rate must be considered taking into account trade turnover, foreign debt, current account, so as to ensure the highest national interest and stability of the market,” Tu said at a press conference held on October 1.

Tu referred to recent suggestion that a devaluation of the Vietnamese dong (VND) is necessary, due to the slowdown of exports. However, the SBV decided against such move, as a lower value of VND could cause negative impacts on imports, Tu stated.

In the context that many countries opt for devaluing their local currencies as a measure to mitigate impacts from the trade war, the VND has remained nearly unchanged since the beginning of the year to date. In Southeast Asian region, only Vietnam and Thailand’s currencies remain the same or strengthen against the US dollar, particularly as the Chinese Yen has been on the decline and reached the threshold of CNY7.2 for US$1.

Sharing the same view with the SBV, Nguyen Bich Lam, head of General Statistics Office, previously said a depreciation of the VND could backfire as Vietnamese exports have low elasticity in terms of price.

Many Vietnamese export items are under low-price segment with limited elasticity. For example, decreasing price from US$1 to US$0.9 would not attract more customers. On the other hand, imports of input materials remain the same at a high level, Lam explained.

Economist Can Van Luc told VNExpress that with great level of economic openness, the impacts of a possible devaluation of the VND to the country’s trade and exports are insignificant.

This could boost exports, but equally imports will rise as well, he said.

Referring to the rate cut by 0.25 percentage points on September 16, Vice Governor Tu considered it supportive to economic growth and liquidity of credit institutions.

According to Tu, a 25 basis-point cut at the moment sends a strong message that the authority is willing to support enterprises’ operations, particularly in the remaining months of 2019.

Tu, however, admitted difficulties in managing interest rates, which require a balance of interest between borrower and lender, between inflation control and benefits of commercial banks.

As of September 24, Vietnam’s credit expanded 8.64% against the end of 2018, which is less than two thirds of the growth target of 14%. The M2 money supply increased 8.58% against the end of 2018, leaving further room for maneuver with target growth rate of 13% for 2019.