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Exchange rate cannot please everyone
Opinions and viewpoints prove to be very different on how the exchange rate should be in the time to come. Meanwhile, the State Bank of Vietnam has advised businesses to take initiative in arranging foreign currencies to serve their import-export and production plans.
In a recent meeting between representatives from Forex Management Department, under the State Bank of Vietnam, and export companies, the officials from the central bank said that it is a very difficult task to manage the forex policy in the context of Vietnam’s close connection to the world. The officials said that exchange rate policy management depends on many macroeconomic variables, while it should not focus on serving the interest of any specific group of interests.
The officials said that businesses need to take initiative in arranging foreign currencies to serve their business plan.
Meanwhile, import and export companies have continuously made different suggestions on forex management.
Nguyen Truong Thanh, General Director of Truong Thanh Woodwork Joint Stock Company, said that Resolution No. 30 of the Government stipulates that the exchange rate policy needs to be designed to benefit export. However, the Governor of the State Bank of Vietnam recently said that it will keep the trading band stable and that the central bank will not sharply devaluate the local currency. This statement, according to Thanh, has puzzled businesses.
Thanh said that if Vietnam does not devaluate the local currency when the greenback is depreciating against the EUR, and GBP, it will create difficulties for exports.
Thanh said that the State Bank of Vietnam should further slash interest rates to support export companies, while it needs to apply a reasonable trading band for the VND/US$ exchange rate.
Meanwhile, Pham Thien Nghe, Secretary General of the HCM City Informatics Association, said that the VND devaluation is what electronics enterprises fear.
The dollar price once soared from VND12,600/US$1.00 to VND13,600/US$1.00, pushing a lot of electronics and informatics enterprises against the wall, even pushing some enterprises into bankruptcy.
“If the central bank depreciates the VND, electronics and informatics companies will ‘die’,” he said.
Truong Dinh Tuyen, Member of the National Advisory Council for Monetary Policies confirmed that there always exist two opposite viewpoints. Tuyen personally thinks that during a time of high inflation, Vietnam should not widen the trading band. However, at this moment, when high inflation is not a risk any more, it is necessary to help make export prices cheaper and more competitive, as well as make import prices more expensive to protect local businesses.
However, Tuyen has reminded that any improper action in forex management may trigger a new wave of currency speculation, which may make the market uncontrollable.
Do Thi Nhien, Deputy Director of the Forex Management Department under the central bank, said that in principle, those, who have foreign currencies, want high exchange rates, while those, who need foreign currencies to feed the imports, want the rates to go down. Therefore, there will not the single solution that can harmonize the benefit of the two groups of interests.
The exchange rate needs to encourage exports, monitor imports, stabilize currencies and the national economy, reassure people and attract investments, she said.
VietNamNet, DTCK
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