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UK bank optimistic about Vietnam’s trade balance
The world’s banking circles on March 29 provided various assessments of Vietnam’s trade deficit in the first quarter of 2010, saying the deficit has not yet reached a dangerous level.
The General Statistics Office (GSO) previously reported that Vietnam had suffered a trade deficit of US$1.35 billion in March and $3.5 billion in the first quarter, which made some experts warn of a possible decline in belief in the Vietnamese dong.
However, Barclays, the second largest bank in the UK, said that this deficit level is not alarming considering the foreign investment poured into Vietnam and overseas Vietnamese’s remittances sent back home.
Prakriti Sofat, an economist from Barclays Capital based in Singapore, said the approximate $2.5 billion in foreign investment in Vietnam and the amount of remittances, worth $1.5 billion in total, in the first quarter have offset the country’s huge trade deficit, causing the exchange rate of the Vietnamese dong on the free market to be on a par with that offered by the State Bank.
Ms. Sofat cited two factors that could help to stabilize Vietnam’s trade balance in the near future – the considerable drop of demand for cars and motorbikes and the fact that the central bank allows merchant banks to adjust their interest rates on medium- and long-term loans.
She also expected an increase in Vietnam’s exports and domestic consumption very shortly.
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