Vietnam’s foreign exchange reserve standing at a new record high of 92 billion USD (Photo: plo.vn)Hanoi (VNS/VNA) - Vietnam’s foreign exchange reserve has hit a new recordhigh of 92 billion USD, a significant expansion from 84 billion USD whichGovernor of the State Bank of Vietnam Le Minh Hung revealed in April.
Ata recent Government meeting, Prime Minister Nguyen Xuan Phuc said the country’sforex reserve was expected to hit 100 billion USD by the end of this year, fivetimes higher than the level recorded at the beginning of his term.
Statisticsof the General Department of Customs showed that August saw a trade surplus of 2.5billion USD and a surplus of 10.93 billion USD in the January-August period,providing a plentiful supply of foreign currencies which enabled the centralbank to purchase foreign currencies from the beginning of this year.
Financialexpert Nguyen Tri Hieu said that high reserves would be an important buffer tohelp the economy withstand external shocks, which would contribute tostabilising the macroeconomy, strengthening foreign investors’ confidence.
“Astable forex market will make foreign investors feel secure when investing in Vietnambecause they will be less worried about forex risks,” Hieu said, adding thatthe forex policy was an important macroeconomic factor for foreign investorswhen considering investing in Vietnam.
Accordingto the central bank, increasing the forex reserve was important so theGovernment could intervene when necessary, especially in the context ofunpredictable global market developments.
EconomistNguyen Duc Thanh said the central bank’s purchase of foreign currencies helpedprevent the strengthening of the Vietnamese dong, meaning lower forex rates,which would hurt exports.
Thanhsaid a stable forex policy was enough at this moment in the context of littledollarisation in the Vietnamese economy.
However,there was a potential risk if Vietnam continued to increase forex reserves thatthe US might accuse Vietnam of currency manipulation, Thanh said.
“Myview is that Vietnam should make the most of diplomatic measures to appease theUS, if the risk increases, at the same time, stubbornly continue to increasereserve,” Thanh said, adding that increasing forex reserves was essential.
Thanhestimated that forex reserves should be increased to the equivalent of sixmonths of imports and towards 150 billion USD in the next 12-18 months.
Thetarget could be higher if the size of the Vietnamese economy and the scaleof imports and exports kept expanding, he said.
Thanhsaid when the post-pandemic economic recovery took place, the demand for USdollar would increase and the Government might have to use the forex reservesto intervene in the market./.
VNA
