Vietnam should take effective measures to reduce the level of dollarization in the economy, which is estimated at 30 per cent currently, foreign financiers urged at a roundtable of Asem businesspeople held recently in Ho Chi Minh City.
The government should lessen pressures on the forex market though its forex rates policies are good, Benedict Bingham, IMF senior resident representative for Vietnam proposed.
The domestic market has been under great pressures over the past 3-4 months, if the situation continues, or worsens, investors’ confidence will be soured, Benedict Bingham highlighted.
Ashok Sud, CEO of Standard Chartered said the government’s monetary polices should help create healthy payment balance particularly the forex payments, and the government should deal the shortage of dollars on the market.
Vietnam’s economy has a 30 per cent dollarization rate, Ashok Sud said.
To reduce dollarization, the government should outline a blueprint; however, it can choose two ways: firstly prices of domestically-made goods must be quoted in the dong and a law should be built to protect dong depositors, Ashok Sud proposed.
The State Bank of Vietnam, the country’s central bank, should supply sufficient dollars to ensure liquidity on the market, Ashok Sud added.
Thomas Tobin, CEO of HSBC in Vietnam advised that the government should build up Vietnamese consumers’ confidence in the dong and have moves to protect dong depositors and refer to India’s experience.
The SBV said it has seen no reasons to devalue the dong sharply, and will coordinate with ministries, provincial and municipal authorities to put the forex market under control, Deputy Governor Nguyen Van Binh told mass media.
Vietnam’s forex reserves estimated at $20 billion, sufficient for its trading demand, however, analysts said that figure is relatively low compared with foreign debts which are equivalent with 45 per cent of GDP. (Industry & Trade)
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