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VN’s forex reserves soar to record-setting $48b

Update: December, 23/2017 - 12:02
Foreign curency exchange at the Ho Chi Minh City Development Bank. — VNA/VNS Photo Tran Viet

Viet Nam NewsHÀ NỘI – Việt Nam’s foreign currency reserves hit approximate US$48 billion thanks to the country’s stable macroeconomic conditions and strong influx of exports, foreign direct investment (FDI) and remittance, according to State Bank of Việt Nam (SBV)’s Governor Lê Minh Hưng.

It meant that the SBV has brought in another $3 billion worth of hard currencies over the past month.

Previously, Governor Hưng told National Assembly deputies on November 16 during a plenary session that the bank had increased its buffer fund by $7 billion in 11 months to bring the sum to a record high of $45 billion.

The rise was reported in the context of the foreign exchange rate in the domestic market being relatively stable. A few years ago, the exchange rate usually fluctuated widely towards the year-end due to seasonal factors.

In particular, the USD/VNĐ rate has undergone little change, although the US Federal Reserve raised its benchmark interest rates by 0.25 percentage points for the third time, effective December 14.

As the US rate increase was well-anticipated, the local forex market did not react negatively to the Fed’s rate announcement. The USD/VNĐ rates were kept almost unchanged on December 15, a day following the rate hike. Across commercial banks, the dollar was traded at some VNĐ22,675 on the buy side and VNĐ22,755 on the sell side. The central bank’s daily fixing, however, was adjusted down by VNĐ7 to VNĐ22,443.

By December 14, the daily reference USD/ VNĐ exchange rate listed by the central bank increased by 1.29 per cent against earlier this year, while the rates quoted by commercial banks and in the unofficial market declined 0.18 per cent and 1.45 per cent, respectively.

According to the central bank, liquidity of the domestic foreign exchange market was good and met the demands of local organisations and individuals.

Experts attributed the stability to reasons such as SBV’s flexible central rate management mechanism, which ensured that the domestic foreign exchange market was less affected by global factors.

The Government’s policy to encourage locals to convert forex holdings into đồng has also provided support. SBV has net purchased $8-8.5 billion worth of forex since the start of this year, higher than the surplus of $4.8 billion in the overall balance of payments.

In addition, the domestic supply-demand relationship with the dollar was relatively stable. Foreign currency supply from exports, foreign direct investment (FDI), official development assistance, tourism and remittances grew positively in 2017.

Việt Nam recorded trade surplus of $2.76 billion in the first 11 months of the year, or 1.4 per cent of total export turnover, according to the Ministry of Industry and Trade. The total export value during the reviewed period was $193.75 billion and import value was $190.99 billion, up 21.1 per cent and 21 per cent year-on-year, respectively.

The country’s total FDI capital in the period also reached a record high of $33 billion, up 82.8 per cent against the same period last year, while FDI disbursement capital also rose by 11.9 per cent to $16 billion.

Remittance this year is estimated at $13.8 billion against $11.5 billion last year, while the country is also expected to greet 13 million foreign visitors in 2017, earning a significant amount in hard currencies.

ANZ recently forecast that the đồng will depreciate slightly against the dollar in the next few years, to reach VNĐ22,900 per dollar by the end of 2018 and VNĐ23,000 by June 2019. - VNS


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