Việt Nam’s foreign exchange reserve was standing at a new record high of US$92 billion. — Photo plo.vn

HÀ NỘI — Việt Nam’s foreign exchange reserve has hit a new record high of US$92 billion, a significant expansion from the $84 billion which the Governor of the State Bank of Việt Nam Lê Minh Hưng revealed in April.

At a recent Government meeting, Prime Minister Nguyễn Xuân Phúc said the country’s forex reserve was expected to hit $100 billion by the end of this year, five times higher than the level recorded at the beginning of his term.

Statistics of the General Department of Customs showed that August saw a trade surplus of $2.5 billion and a surplus of $10.93 billion in the January-August period, providing a plentiful supply of foreign currencies which enabled the central bank to purchase foreign currencies from the beginning of this year.

Financial expert Nguyễn Trí Hiếu said that high reserves would be an important buffer to help the economy withstand external shocks, which would contribute to stabilising the macroeconomy, strengthening foreign investors’ confidence.

“A stable forex market will make foreign investors feel secure when investing in Việt Nam because they will be less worried about forex risks,” Hiếu said, adding that the forex policy was an important macroeconomic factor for foreign investors when considering investing in Việt Nam.

According to the central bank, increasing the forex reserve was important so the Government could intervene when necessary, especially in the context of unpredictable global market developments.

Economist Nguyễn Đức Thành said the central bank’s purchase of foreign currencies helped prevent the strengthening of the Vietnamese đồng, meaning lower forex rates, which would hurt exports.

Thành said a stable forex policy was enough at this moment in the context of little dollarisation in the Vietnamese economy.

However, there was a potential risk if Việt Nam continued to increase forex reserves that the US might accuse Việt Nam of currency manipulation, Thành said.

“My view is that Việt Nam should make the most of diplomatic measures to appease the US, if the risk increases, at the same time, stubbornly continue to increase reserve,” Thành said, adding that increasing forex reserves was essential.

Thành estimated that forex reserves should be increased to the equivalent of six months of imports and towards $150 billion in the next 12-18 months.

The target could be higher if the size of the Vietnamese economy and the scale of imports and exports kept expanding, he said.

Thành said when the post-pandemic economic recovery took place, the demand for US dollar would increase and the Government might have to use the forex reserves to intervene in the market. — VNS