Dollar notes being counted at a Vietnamese bank. (Photo: VNA)Hanoi (VNA) – Vietnam’s foreign exchange reserves are at an all-timehigh of 42 billion USD, Le Minh Hung, Governor of the State Bank of Vietnam (SBV),said at the monthly cabinet meeting on July 3.
The reserves have increased by roughly 1 billion USD against the end of lastyear.
The rise was reported in the context of the foreign exchange rate in thedomestic market being relatively stable, but the trade deficit returning.
Though the daily reference dong/dollar exchange rate listed by the centralbank in the first five months of this year rose more than 1 percent against thestart of the year, the rate quoted in commercial banks and in the unofficialmarket dropped by 0.12 percent and 1.5 percent, respectively.
However, after achieving trade surplus last year, the country posted a tradedeficit of 2.7 billion USD in the first six months, equal to 3.4 percent of thecountry’s total trade turnover.
To expand the foreign reserves, in the first half of 2017, the central bank increasedthe buying rate for the greenback at its transaction centre thrice, posting atotal increase of 150 VND. The latest hike of 50 VND was made on June 19,raising its buying rate for the US dollar from commercial banks to 22,725 VND perdollar.
Analysts say the buying rate hike at SBV’s centre is aimed at encouragingcommercial banks to buy dollars from currency holders at higher rates. Thebanks will then sell dollars to SBV’s centre, helping the central bank furtherbuild foreign reserves to prepare for any fluctuation that may occur if the USFederal Reserve (Fed) increases interest rates.
At the meeting, Hung said the liquidity of the domestic foreign exchange marketwas good and met the demands of local organisations and individuals.
The forex market had been also stable, considering that the Fed had so farincreased interest rates three times this year.
Banking expert Can Van Luc explained the reasons for this stability.
Apart from the fact that world financial markets witnessed no fluctuation, theSBV’s flexible central rate management mechanism ensured that the domesticforeign exchange market was less affected by global factors.
Besides this, the domestic supply-demand relationship with the dollar wasrelatively stable. Foreign currency supply from exports, foreign directinvestments (FDI), official development assistance (ODA) disbursement, tourismand remittances had grown positively in the first five months, Luc said.
Hung forecast that the Fed would likely make another interest rate hike this year.The SBV would actively watch the domestic and global foreign exchange marketsand take timely measures to ensure good domestic foreign exchange liquidity andavoid speculation.
“The State Bank of Vietnam is capable of controlling and stabilising the forexmarket as directed by the Government,” Hung said.-VNA
VNA
