The State Bank of Vietnam (SBV), the country’s central bank, is willing to sell foreign currency in large volumes and at a price lower than the market ones with an aim to stabilize the currency market which is fluctuating, BizLIVE quoted Pham Thanh Ha, head of the bank's Monetary Policy Department, as saying.

Pham Thanh Ha, head of the SBV’s Monetary Policy Department. Source: SBV.

Over the past week, the USD/VND exchange rate quoted by commercial banks has been rising sharply to over VND23,700 as of late Monday. The USD selling prices at Vietcombank were listed in range of VND23,600 – 23,760, up VND230 compared to last week.

Similarly, selling prices of the greenback at other lenders such as Vietinbank, BIDV, ACB, Eximbank, Techcombank, and Sacombank also increased by VND160 – 200 against last week.

Ha said since early 2020 to before the Lunar New Year holiday, the SBV had brought in large amount of foreign currency to build up the country’s foreign exchange reserves, given favorable exchange rates and abundant foreign currency supply.

After the Lunar New Year, the exchange rate remained stable and banks continued to sell foreign currency to the SBV, despite the growing impacts of Covid-19 pandemic.

“However, since the beginning of last week, the exchange rate has been moving upward when volatility occurred in global financial markets. However, FX liquidity in Vietnam stayed normal to keep up with the supply and demand for foreign currencies,” said Ha.

Ha said the Covid-19 pandemic is causing depreciation for currencies of Vietnam’s major trading partners. While major central banks have intervened to support liquidity for markets, it would require more time before changes in policy take full effect.

Additionally, negative market sentiment also led to a rise in USD selling prices against the VND.

Ha expected there would not be a major impact on the foreign currency supply – demand, thanks to Vietnam’s trade surplus of US$1.82 billion the first two-month period and an estimated surplus of US$880 million in March.

Ha said the SBV continues to monitor both domestic and foreign financial markets for appropriate management of monetary policy.

The large amount of foreign currency purchased in 2019 and the first few months of 2020 helped the SBV to solidify national financial security, while enhancing its capabilities to intervene in the foreign exchange market if needed, Ha stressed.

In 2019, the SBV bought in US$20 billion to take Vietnam’s foreign exchange reserves to nearly US$80 billion.