31st Sea Games - Vietnam 2021 Covid-19 Pandemic
Home / Economy / Banking & Finance
Vietnam’s strong foreign currency supply helps stabilize USD/VND exchange rate: Expert
Nguyen Tung 10:56, 2019/09/12
Three main sources of Vietnam’s foreign currency include the disbursement of the FDI, trade surplus and M&A activities.
Vietnam’s strong foreign currency supply has been instrumental in stabilizing the USD/VND exchange rate, according to Nguyen Duc Hung Linh, director of individual customer analysis and consultancy at SSI Securities.
 
Illustrative photo.
Illustrative photo.
Linh pointed to three main sources of Vietnam’s foreign currency, including the disbursement of the FDI, trade surplus and M&A activities. 

Production shift from other countries coming to Vietnam has brought in a capital inflow worth billions of USD, said Linh in an interview with the National Assembly Television. 

According to Linh, a stable USD/VND exchange rate would boost the confidence of foreign investors in Vietnam through both direct and indirect investments. 

By preventing the VND from devaluing, Vietnam could avoid a hike in foreign debt, which currently accounts for 50% of the country’s GDP, Linh said. 

A decrease by 1% in value of the local currency, thus, would increase the foreign debt by US$1 billion. 

Linh said the USD/VND exchange rate is influenced by both internal and external factors, in which the former would stabilize the exchange rate through managing interest rate and foreign currency reserves. 

However, Linh said external factors are more unpredictable in nature, for example the devaluation of Chinese Yen (CNY). If the CNY is devalued by an additional of 10%, other currencies in the world may be subjected to adjustment. 

An adjustment to the VND, if happens, would not cause any major impact to the economy, as the USD/VND exchange rate has been stable since the beginning of the year and the State Bank of Vietnam (SBV) still has room to adjust the rate, Linh asserted. 

Bao Viet Securities in its monthly report said the SBV is predicted not to devalue the Vietnamese dong (VND) strongly (over 3%) to avoid the risk of being put into the US's currency monitoring list.
Other news
13:20, 2022/20/23
Vietnam c.bank raises policy rates first time in two years
A higher interest rate cap would have a direct impact on banks, businesses, and people.
15:06, 2022/06/19
Central bank rules out expanding credit growth target
The SBV set the credit growth target at 14% this year, higher than the 2020-21 period, which was 12.17% and 13.61%, respectively.
15:39, 2022/39/15
Vietnam's bond market expands to nearly $100 billion
The growth was driven by both the Government and corporate bond segments.
07:00, 2022/00/11
Authorities urged to address businesses' “inflating” capital
In a broader sense, such a practice would cause negative impacts on the stock market and the confidence of investors.
18:53, 2022/53/07
Central bank considers expanding credit quota for well-run banks
In the past months, the fact that many banks have seen their quota reaching the limits makes it hard for people and businesses to access loans.
16:07, 2022/07/07
Finance ministry offers redemption path for FLC-linked stocks
FLC Group and its affiliates have so far failed to meet the stock market’s regulations and face the threat of forced delisting.