Danang Hi-Tech Park
Dinh Vu

Finance & Banking

Last updated: Monday, May 21, 2018


SBV Stops Exchange Rate Fall

Posted: Saturday, April 22, 2017

The continuous decline of USD/VND exchange rate in recent days has forced the State Bank of Vietnam (SBV) to take intervening actions.
The US dollar is volatile on the international market. On April 13, the Dollar Index declined to 100.65 from 101 a day earlier in Asia. In Hanoi, the popular bid price for a dollar was at VND22,665 and the offer price was at VND22,685, down VND15 from a day earlier. For one week, the USD price dropped by VND45. In the banking system, the greenback quotation rose back to VND22,700 after sliding below this level on the morning of April 12.
The downward trend of the exchange rate forced the SBV to buy dollars to put a stop to the spiral. On April 11, the SBV pushed up the USD buying price. The greenback price, fixed at VND22,575 per dollar for the last three months, changed, rising by VND100 VND to VND22,675. On April 12, the buying price set by the SBV was kept at VND22,675 in a bid to create a locking pin on the USD/VND exchange rate, which went down since the end of March 2017.
This was the second time since the beginning of 2017 the SBV had to act to break off the downward spiral of the exchange rate. The first action was taken on January 9, 2017 when the regulator also had to raise the purchasing price from VND22,300 to VND22,575 per dollar.
In the interbank market, after a deep fall, the exchange rate looked up by VND8 to VND22,670. At banks, the dollar price was anchored at VND22,700. According to many experts, the SBV may buy more dollars to increase foreign exchange reserves.
The SBV’s intervention aimed for exchange rate stability. If the exchange rate continues to fall further or VND appreciates amid local currency depreciation in the world, it will restrict competitiveness and export support. Thus, the regulator must quickly act for the common good.
According to the National Financial Supervisory Commission, the VND/USD exchange rate at commercial banks tended to decrease from January 2017, but gained in the first half of February. The exchange change volatility was attributed to strong import growth in the first quarter of 2017.
A report from Bao Viet Securities Company (BVSC) found that USD/VND exchange rate movements in the first quarter were relatively stable at large. As compared with the end of 2016, the prime rate set by the SBV at the end of March rose by about 0.5 per cent, while the quoted exchange rate at commercial banks edged up slightly by 0.02 per cent.
According to BVSC, the USD/VND exchange rate tended to pick up slightly in the last quarter because of two reasons. Objectively, the US dollar fell sharply in the world market in the first quarter. The country ran a trade deficit of US$1.9 billion in the first three months of 2017, compared with a surplus of US$776 million in the corresponding period of 2016. Trade deficit placed certain pressures on the exchange market and sometimes caused considerable fluctuations. BVSC believed that the exchange rate this year is quite unpredictable and potentially risky.
Bao Chau

Other news

Trien lam ICT
Sunny World Property Development Corporation
Thanh Binh Phu My
Golf Long Thanh
Nam Kim
Cty Sai Gon- Tay Bac