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Forecasts about VND/US$ exchange rate in H2
It is expected that the VND/US$ exchange rate will increase by 4.9% compared to the end of 2007, or double the increase in the period from 2004-2007. The dollar price is expected to hover around VND16,800/US$1, lower than the current rate of VND16,825/US$1.
The VND/US$ exchange rate was nearly stable in previous years with very slight changes. If comparing the exchange rate in December of one year with the rate in December of the previous year, the exchange rate increased by 0.4% in 2004; 0.9% in 2005; 1% in 2006; and decreased by 0.03% in 2007. On average, the dollar price increased by 0.57% from 2004-2007.
If comparing the average exchange rate of one year with the previous year, the exchange rate increased by 1.57% in 2004; 0.56% in 2005; 09.5% in 2006 and 0.62% in 2007.
The VND/US$ exchange rate performance in 2008 has been vastly different.
First, it has fluctuated more than in previous years. The dollar prices decreased continuously in the first three months of the year and then increased continuously in the next three months.
Second, the gaps between the sale prices on the black market and the bank-to-business market sometimes have been plus (+) and sometimes minus (-), and always very big.
What is the scenario for the VND/US$ exchange rate in the time to come, then? (the exchange rate in December 2008 in comparison to December 2007 and 2008’s average exchange rate in comparison to 2007’s average exchange rate).
The exchange rate in the second half of 2007 went as follows: the dollar price increased by 0.22% in July, 0.16% in August, 0.57% in September, decreased by 0.6 in October, 0.28% in November and 0.19% in December.
On average, the VND/US$ exchange rate decreased by 0.12% in the second half of 2007. It is expected that the same reduction will also take place in the second half of 2008.
The same reduction in the dollar price is predicted for the second half of this year because of many reasons.
First, the State Bank of Vietnam has interfered in the market, requesting foreign currency agents to respect laws and punish violating agents.
Second, national liquidity has been improved thanks to the surplus of the international payment balance. The trade deficit is forecast to decrease in the second half to reach $20bil, not $30bil as predicted by some international institutions.
Foreign currencies are inflowing into Vietnam. The FDI disbursement is estimated to reach $5bil in the first half, up by 37.5%, and is expected to reach $11bil. The ODA disbursement is estimated to reach $1.1bil in H1, and is expected to reach $2bil in H2.
Overseas remittance is expected reach over $8bil, while foreign travellers’ spending is expected to reach $4bil.
With such favourable conditions, it is expected that the VND/US$ exchange rate will increase by 4.9% compared to the end of 2007, or double the increase in the period of 2004-2007. The dollar price is expected to hover around VND16,800/US$1, or lower than the current rate of VND16,825/US$1.
If comparing the 2008 average exchange rate with 2007’s exchange rate, the dollar will increase by 0.6%.
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