The State Bank of Vietnam (SBV) on January 4 launched the daily average inter-bank exchange rate between the Vietnam dong and the U.S. dollar and reference exchange rates between the dong and some other foreign currencies. The move is in line with the central bank’s Decision No. 2730/QD-NHNN dated December 31, 2015, which took effect on January 4. Based on the average inter-bank exchange rate, local banks and foreign bank branches in Vietnam that provide forex services can quote their dollar buying and selling prices on a daily basis. This rate depends on fluctuations of the average inter-bank exchange rate, developments on world forex markets having close trade, lending, borrowing and investment ties with Vietnam and macro-economic conditions. It must be compatible with Vietnam’s monetary policy targets. A deputy general director of a bank said this rate will depend on a basket of eight hard currencies, and on dollar supply and demand on the domestic market. … [Read more...] about VN central bank applies daily reference exchange rates
Real effective exchange rate
Trade deficit-exchange rate formidable problem for VN
According to the Vietnam General Statistics Office (GSO), trade deficit escalated to US$3 billion in the first four months this year, a three year record high. Especially, the trade gap from China approximated US$10.7 billion. The State Bank of Vietnam has recently lifted the foreign exchange rate between the Vietnamese dong and US dollar, which is said to limit the trade deficit. However experts said it unlikely to work much because the foreign exchange rate is just a part of the problem. In the first four months, export turnover reached US$50.1 billion, up 8.2 percent over the same period last year. Meantime, import turnover hit US$53.1 billion, up 19.9 percent, creating a trade deficit of US$3 billion. Vietnam enjoyed a trade surplus of US$0.68 billion in the same period last year. Imports from China continued surging to touch US$15.6 billion, a year on year rise of 26 percent while exports to this market brought only US$4.9 billion, down 1.2 percent. Trade gap from this neighbor … [Read more...] about Trade deficit-exchange rate formidable problem for VN
Trade deficit-exchange rate formidable problem
According to the Vietnam General Statistics Office (GSO), trade deficit escalated to US$3 billion in the first four months this year, a three year record high. Especially, the trade gap from China approximated US$10.7 billion. The State Bank of Vietnam has recently lifted the foreign exchange rate between the Vietnamese dong and US dollar, which is said to limit the trade deficit. However experts said it unlikely to work much because the foreign exchange rate is just a part of the problem. In the first four months, export turnover reached US$50.1 billion, up 8.2 percent over the same period last year. Meantime, import turnover hit US$53.1 billion, up 19.9 percent, creating a trade deficit of US$3 billion. Vietnam enjoyed a trade surplus of US$0.68 billion in the same period last year. Imports from China continued surging to touch US$15.6 billion, a year on year rise of 26 percent while exports to this market brought only US$4.9 billion, down 1.2 percent. Trade gap from this … [Read more...] about Trade deficit-exchange rate formidable problem
Problems latent behind the dong/dollar exchange rate stabilization
The dong/dollar exchange rate stabilization for a long period has been hailed as the result of the great exertion by the State Bank to stabilize the foreign currency market. However, experts say they still can see latent problems. By April 5, 2012, the dong/dollar exchange rate had been stabilized for 80 consecutive days. The interbank exchange rate announced by the State Bank of Vietnam was kept unchanged, while the exchange rates quoted by commercial banks were also stable on the day. Only Vietcombank’s dollar price increased very slightly at the end of the day. In fact, the dong/dollar exchange rate has been stable for the last six months. The State Bank of Vietnam succeeded with its management policies, restoring the confidence in the Vietnam dong value, thus allowing to avoid the chaos which occurred sometimes in previous years. In the context of the exchange rate stabilization, Governor of the State Bank Nguyen Van Binh was self-confident to state that in 2012, the … [Read more...] about Problems latent behind the dong/dollar exchange rate stabilization
Adjusting exchange rate to curb inflation
If the exchange rate is managed well along with other solutions, inflation will be controlled, helping stimulate economic growth and stabilise the macroeconomy. On February 11, the State Bank of Vietnam (SBV) decided to raise the interbank exchange rate to VND20,693 per US$1 and narrow the trading band from 3 percent to 1 percent on the other side of the rate. This decision had immediate impact on the domestic gold and US$ market. Pressure of price hikes Some international experts have warned of rising inflation and Vietnam's risk of debt after SBV made the move even though it is considered a measure to speed up economic growth and reduce the trade deficit. Speaking on Bloomberg News- a financial and business news agency, Dariusz Kowalczyk, a senior economist from France's Credit Agricole CIB Bank in Hong Kong said he was very surprised at the adjustment of the US$ and VND exchange rate. Talking to VOVNews on the same day, former SBV Governor Cao Sy Kiem said the exchange … [Read more...] about Adjusting exchange rate to curb inflation