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VND/US$ exchange rate still within control
Regarding the impact of the US financial crisis on the VND/US$ exchange rate, bankers say that they are providing loans selectively and they will not lack dollars like earlier this year.
The value of the dollar will still depend on the development of the US financial crisis and the seriousness of the crisis’ impacts on Vietnam.
The bad news of the US financial market in recent days has pushed the dollar price up slightly in the interbank market by VND30/US$1. The VND/US$ exchange rates were VND16,720/US$1 and VND16,820/US$1, purchase and sale on September 19.
Explaining this, analysts say that the US financial crisis has led to a decrease in the demand for imported commodities from big economies, while foreign investors tend to limit investments, which has affected Vietnam’s foreign currencies income sources. The decreased income of foreign currencies is one of the reasons behind the slight increases of the dollar recently.
However, bankers are still optimistic about the stability of the VND/US$ exchange rate. The deputy general director of a state-owned bank said that the US government has been taking strong actions to rescue financial institutions and banks, which has helped stabilise the value of the dollar.
The official also believes that the government of Vietnam should also take action to avoid bad impacts from the financial crisis. As Vietnam’s economy has shown signs of recovery, the VND may appreciate against the dollar.
The two forecasted opposite tendencies (the decreased income of foreign currencies and the VND revaluation) would prevent the dollar from sharply revaluating, and the price increases, if occurring, would only last for a short while.
In fact, the State Bank of Vietnam has been taking action since the beginning of the year, purchasing or selling foreign currencies, in an effort to stabilise the exchange rate. Recently, since mid July, as the market has shown signs of oversupply, the central bank has interfered in the market by purchasing foreign currencies. The intervention has helped the exchange rate on the black market and the rates quoted by commercial banks have kept stable at around VND16,600/US$1.
Analysts say that it is very difficult to predict how the VND/US$ exchange rate will be in the long term. The value of the dollar will still depend on the development of the US financial crisis and the seriousness of the crisis’ impacts on Vietnam.
An economist said that a lot of people may consider selling dollars for fear that the US financial crisis will put pressure on the debts of the US government, which would make the greenback devaluate against other currencies. In the long term, importers would prefer signing contracts in dollars, while exporters would want to sign in other, more stable currencies.
“If the US economy cannot recover, the US$ will lose its value, while the VND would revaluate, bringing the VND/US$ exchange rate back to VND16,000/US$1,” the economist said.
When asked if the problems of the US economy would affect the foreign currency trading activities of domestic banks, Foreign Currency Trade Director of a joint stock bank said that no considerable impacts would occur. Vietnam now is still trying to tighten imports, while banks are still limiting loaning in foreign currencies. Therefore, the supply and demand of foreign currencies have been staying stable.
VNN
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