Foreign reserves hit record high of 57 billion USD

Foreign reserves hit record high (illustrative photo - Source: baodautu.vn)

The State Bank of Vietnam (SBV) continues to build up its foreign exchange reserves to cushion external shocks, raising the fund to a new record high of more than 57 billion USD till February 6.

According to SBV Governor Le Minh Hung, SBV’s net purchase of hard currencies this year has been worth more than 4 billion USD.

SBV affirmed it would continuously try to increase the country’s foreign reserves this year, besides supporting efforts to stabilise the forex market.

Experts have so far been optimistic about the foreign exchange market in 2018, noting that the market would be stable, with the Vietnamese dong devaluing slightly by some 0.5-1 percentage points to 22,710-22,950 VND.

According to the Bank for Investment and Development of Vietnam’s capital and monetary research division, the country’s overall balance of payment can maintain a healthy surplus of some 8-10 billion USD this year, which is important for the stability of the forex market.

The good balance of payment is expected due to a predicted trade surplus this year, while the remittance inflow is likely to inch by 5 percent to some 10.5 billion USD.

Foreign direct and indirect investment capital inflows are also anticipated to maintain high growth, owing to improvement in the business environment of the country, the division said, forecasting the disbursement of capital source could reach 21-23 billion USD this year.

Last year, the SBV also successfully made a net purchase of 13 billion USD, raising the forex fund to 53 billion USD, the highest ever.

Bloomberg reported last year that the Vietnamese dong was one of the most stable currencies in Asia in 2017.

Hung attributed the success to SBV’s insistence in monetary and foreign currency policies.

“The rising foreign reserves have contributed to strengthening Vietnam’s prestige and creating confidence in investors investing in the country,” he said.

According to him, liquidity of the domestic foreign exchange market last year was good and met the legal demands of local organisations and individuals.

Thanks to the high foreign reserves, domestic commercial banks on February 8 continued devaluing the US dollar against the Vietnamese dong for the second consecutive session, despite a rise of the greenback in the global market.

The decline was seen in the context of the country’s abundant dollar supply source, while having no demand pressure.

State-owned Vietcombank on February 8 afternoon listed the dollar at 22,650 and 22,720 VND for buying and selling, respectively, down 10 VND against the previous day and 25 VND from February 5.

BIDV also cut the buying and selling rate by 25 VND and 15 VND to quote the dollar at 22,650 VND and 22,730 VND, respectively, while the decreasing rate at Vietinbank is 9 VND to 22,652 VND for buying and 22,722 VND for selling.

The same move was also seen at joint stock commercial banks, with a decrease of 15-25 VND per dollar.

ACB devalued the dollar by 20 dong against the previous day to 22,650 VND for buying and 22,720 VND for selling, while Techcombank listed it at 22,650 VND and 22,740 VND for buying and selling, respectively.

The State Bank of Vietnam on February 8 also set the daily reference exchange rate at 22,435 VND per dollar, down by 10 VND from the previous day.

With the current trade band of +/- 3 percent, the ceiling rate applied to commercial banks during the day is 23,108 VND and the floor rate is 21,762 VND.

In the global market, the dollar was supported after a budget deal in Washington, rising against a broad range of currencies. US congressional leaders reached a two-year budget deal on Wednesday to raise government spending by some 300 billion USD. The dollar index rose to a two-week high of 90.403 on February 7 and last stood at 90.251./.

VNA