Vietnam's large foreign exchange reserves and foreign direct investment (FDI), coupled with the flexible management of the State Bank of Vietnam (SBV) are considered main factors to keep the USD/VND exchange rate stable in the remaining months of 2018, VnExpress cited experts as saying.
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Meanwhile, the USD/VND exchange rate quoted by commercial banks also increased considerably, hovering around VND23,315 - 23,395, or even VND23,400. Local banks can set their USD prices +/-3% on the either side of the benchmark rate fixed by the central bank.
In the free market, the USD buying and selling prices were VND23,440 and VND23,490, up VND20 for each compared to previous trading sessions.
However, over the last two days, the benchmark rate has been stable, for which the selling price was VND22,719 on October 11 and went back to VND22,721 a day later. With the maximum fluctuation rate of 3%, the price ceiling and floor applied by commercial banks would be VND23,402 and VND22,039, respectively.
Under this circumstance, banks decreased the USD selling price by VND10 - 20, reaching VND23,300 - 23,380.
Andy Ho, CIO of VinaCapital, said the devaluation of the Chinese yuan (CNY) would partly put pressure on the VND, however, Vietnam's foreign exchange reserves are sufficient to help stabilize the exchange rate until the end of the year. "The depreciation of the VND and to what extend should be seen as the government's solution to support exports," Ho was quoted by VnExpress as saying.
HSBC Vietnam Country Head of Global Markets Ngo Dang Khoa said the USD/VND exchange rate has been quite stable compared to the region. Since the beginning of the year, the VND has depreciated by 2.6%, while the depreciation has been wider for other currencies in the region, especially Indonesia' rupiah with nearly 10%.
According to Khoa, the US - China trade friction has caused a sharp depreciation from CNY compared to the USD at around 8%.
China is Vietnam's major trading partner and latter is having a trade deficit with the former, so that the CNY's devaluation would have a certain impact on the VND. However, the VND would remain stable, thanks to flexible management of the SBV, among other factors, Khoa added.
At present, banks' liquidity of foreign currencies are at positive level, he continued, adding that lenders could still meet customers demand for purchasing US$1 million or even US$100 million.
Additionally, Vietnam's trade surplus of over US$6 billion in the first nine months of 2018 and FDI disbursement of US$13.5 billion play a major role supporting the stabilization of the USD/VND exchange rate in the coming time, Khoa stressed.
An expert from a foreign bank said that payment of foreign debts is not likely to undergo great pressure in the remaining months of the year, while the country is pushing for the privatization of state-owned enterprises. This could attract high amount of USD flowing into Vietnam from now on until the end of 2018, he stated.
Standard Chartered expected the USD/VND exchange rate to hover around VND23,400 by the end of 2018. The VND could then slightly depreciate in early 2019 before appreciating against the USD by the end of 2019, due to positive internal and external factors, the bank added.
Specifically, the USD/VND exchange rate would reach VND23,400 at the end of 2018, down to VND23,300 by the end of 2019 and VND22,700 by the end of 2020.
