Illustrative image (Source: VNA)International organisations lauded the exchange rate and amplitude adjustments made by the State Bank of Vietnam (SBV) as a timely and appropriate move to cushion external shocks.
Head representative of the International Monetary Fund (IMF) in Vietnam Jonathan Dunn said the widening of the trading band provides an enhanced buffer against external shocks and provides more scope for Vietnam to have an independent monetary policy, and thus will help the authorities achieve the broader goal of maintaining macroeconomic and inflation stability. He also said the enhanced two-way flexibility is also important to facilitate fundamental changes in Vietnam’s economy, such as in response to new trade arrangements and other structural reforms.
Acknowledging the SBV’s accurate assessment and prompt response to external developments, Country Director of the World Bank (WB) in Vietnam Victoria Kwakwa said the step showed a more flexible in exchange rate management, allowing market elements to have a more active role in determining the exchange rate while contributing to stabilising the financial market.
However she cautioned that Vietnam should continue to maintain macroeconomic stability in the long run, develop “policy buffers” and consolidate a macroscopic foundation to strengthen the economy’s capacity to resist and recover from outer shocks such as the recent devaluation of the Chinese Yuan.
Agreeing with Kwakwa’s point view, General Director of Vietnam Standard Chartered Bank Nirukt Sapru reckoned that in the short term, the SBV’s adjustments will benefit competitiveness in exports, but in the long term, the government should focus on macroscopic elements.
He also praised the country’s progresses in the past two years, adding that the widened exchange rate amplitude gave more scope to cope with future risks while enabling the government to manage the domestic currency more effectively.
Natalia Ansell, General Director of Vietnam Citibank said the SBV’s timely adjustments reflected its response speed and flexibility while maintaining Vietnam’s economic competitive edge, ensuring growth targets.-VNA
