Vietnam c.bank stands ready to intervene for FX market stability
Updated at Tuesday, 21 May 2019, 16:14
The Hanoitimes - The State Bank of Vietnam has bought in a large amount of foreign currency in a bid to ensure national finance-monetary security and greater capacity to intervene the foreign exchange market if needed.
The State Bank of Vietnam (SBV), the country's central bank, is ready to sell foreign currency to ensure forex market stability amid the weakening of the Vietnamese dong against the US dollar, according to Pham Thanh Ha, head of the SBV’s Monetary Policy Department.
On May 21, the SBV set the reference rate of USD selling price at a record high of VND23,069. Banks can set their own quotes with a band of 3% on the either side of the benchmark rate.
Pham Thanh Ha, head of the SBV’s Monetary Policy Department. Source: SBV.
The USD selling price at Vietnam Export Import Commercial Bank (Eximbank) increased slightly by VND10 to VND23,450, while that of Commercial Bank for Foreign Trade of Vietnam (Vietcombank) remained unchanged at VND23,465, and Sai gon Thuong Tin Commercial Joint Stock Bank (Sacombank) at VND23,470.
The USD buying price in cash fluctuated from VND23,310 to VND23,345, making a difference between buying and selling prices of VND100 – 120 per USD.
In the free market, the USD selling price stood at VND23,430 and buying price at VND23,380.
The USD/VND exchange rate has been on an upward trend since the end of April to date.
The head of the SBV’s Monetary Department attributed the higher USD/VND exchange rate to growing uncertainties regarding the US-China trade talks, putting the market in a state of concern.
Meanwhile, the ongoing devaluation of the Chinese yuan since late April to date has caused a negative impact on Vietnam’s foreign currency market, again putting pressure on the exchange rate, Ha added.
Nevertheless, Ha said market liquidity and the supply/demand balance on the market remain stable.
As of mid-April, the SBV has bought in a large amount of foreign currency in a bid to ensure national finance-monetary security and greater capacity to intervene the foreign exchange market if needed, he stressed.
“In the coming time, the SBV would continue to monitor the domestic and foreign markets and adopt a flexible management of the reference rate. In case of necessity, the SBV is willing to sell foreign currency to stabilize the market and the macro-economy,” Ha stressed.
Economist Le Xuan Nghia previously said the escalation of the US – China trade war, including the recent depreciation of the yuan, is causing concern, particularly with countries having large trade turnover with China, including Vietnam.
In the first four months of 2019, the State Bank of Vietnam (SBV) bought in US$8.5 billion, bringing the country’s total foreign reserves to US$65 billion, according to Viet Dragon Securities Company (VDSC).
Never before did the SBV manage to purchase such large amount in just a short time frame, said VDSC in its latest report.
According to the government’s report read before the National Assembly on May 20, the average consumer price index (CPI) in the first four months rose 2.71% from a year earlier, the lowest recorded over the last three years.
Notably, the foreign exchange market stayed stable with foreign reserves hitting record high, stated the government, without giving a specific number.
Vietnam posted year-on-year GDP growth of 6.79% in the first quarter of 2019, lower than the 7.38% expansion recorded in the first quarter of 2018. The expansion rate, however, remained the best first-quarter performance in the 2009 – 2017 period.
The country posted exports of US$78.8 billion in the four-month period, up 5.8% year-on-year, leading to a trade surplus of US$711 million.