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Signs of foreign investors withdrawing capital: expert
There are signs that foreign investors are trying to sell stakes and purchase dollars to transfer abroad. Foreigners’ dollar purchases have pushed the dollar price up in the last few days, according to Dr Cao Sy Kiem, a member of the National Advisory Council for Monetary Policies.
Could you please tell us more about the signs of foreign investors withdrawing capital?
Recent happenings show that foreign investors have been trying to withdraw capital from both direct and indirect investments to save their home economies. Foreign investors have been trying to sell stakes and buy dollars to transfer home. The large purchases of dollars by foreign investors have led to the more expensive dollar and weakened VND purchasing power.
Do you think that there is a link between foreign investors’ stock market sales in recent days and the revaluation of the dollar?
Yes, I do. I think this is the reason behind the dollar fever the last few days.
Did the 1997-1998 Asian financial crisis originate from the massive withdrawal of capital made by foreign investors?
The current situation is far different from the circumstances in which the 1997-1998 crisis occurred. At that time, Thailand fell into a crisis because it had mobilised a lot of short-term capital from foreign sources, which made it unable to make payments when investors withdrew a huge quantity of capital. At that time, Vietnam’s economy was not very open, which allowed it to avoid the crisis. However, our economy is more open now. We have mobilised capital from all over the world and will have difficulties when the world’s economy has problems.
Do you worry that foreign investors will continue withdrawing capital?
We will face certain difficulties if foreign investors make big capital withdrawals, and the withdrawals become a trend.
What should we do to deal with the problem? Should we take measures to control the capital withdrawals?
The key problem now is the weakening global economy. In some cases, foreign investors have to withdraw capital in Vietnam to protect their benefits in their home countries.
I think there are two measures. First, trying to persuade foreign investors to have confidence in Vietnam with the country’s economic and financial certainties. Second, we need to increase the investment yield of Vietnamese securities so that foreign investors find it more profitable to keep investments in Vietnam.
VNN
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