The State Bank of Vietnam (SBV), the country's banking regulator, has not received any request from commercial banks to purchase foreign currency at low price, an unnamed SBV's high ranking official told VnEconomy on July 4.
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One day later, the SBV decreased the selling price of USD by 1% or VND244 (US$0.011) to VND23,050, which is VND264 lower than the ceiling level of the reference rate.
However, at present, no commercial banks have contacted the SBV to purchase foreign currency. According to the SBV official, the main reason is the self-adjusted market mechanism, which helps ensure smooth transactions of foreign currency,
Furthermore, the official considered it is necessary to balance the inflow and outflow of foreign currency. For the last two years, the SBV has been a net buyer of foreign currency, with the aim of increasing the country's foreign exchange reserves. Thus the SBV is willing to sell if needed to balance the flow of foreign currency, the centrak banker noted.
Additionally, this move will help SBV mobilize VND-denominated funds, instead of mainly issuing treasury bills.
With regard to the Vietnamese dong, the official said the SBV will balance the amount of VND in circulation in the economy, which is vital to ease pressure on the exchange rate and inflation.
Moreover, as the dong is under pressure to devalue following sharp depreciations of other currencies in the Asia-Pacific region, it is necessary for the SBV to intervene and minimize potential negative impacts on the macro-economy.
Vietnam's stabilized marco-economy is considered the country's advantage compared to other countries with high volatility of exchange rate, said the official. Over the years, this has proved essential to attract foreign investment capital and creating a favorable business environment.
Evidently, in the first six months of 2018, despite geopolitical uncertainty and volatility in global markets, Vietnam's stock market witnessed strong foreign cash inflows with foreign investors' net purchases reaching VND40.5 trillion (US$1.76 billion), according to the State Securities Commission of Vietnam (SSC).
SBV's net purchase of foreign currencies exceeded US$11 billion in the first half of 2018, taking the nation's foreign exchange reserves to approximately US$63.5 billion, said SBV Governor Le Minh Hung at a government meeting on July 2.
"This shows the bank has sufficient resources and instruments to stabilize the USD/VND exchange rate and more importantly the market conditions," the governor added.
