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Forex rates to remain stable
Vietnam’s dong-dollar exchange rate is to remain largely unchanged over the rest of the year as the country now boasts fruitful currency sources, say analysts.
Vietnam’s foreign currency reserves were reported to have risen to some $30 billion in the early part of this year, up by more than $10 billion on the same period last year.
By the end of 2013’s second quarter, foreign remittances going through Ho Chi Minh City’s banks had surged 3 per cent on-year, reaching $1.9 billion.
The World Bank’s assessment revealed that the country’s foreign currency reserves had doubled and lower inflation during the last two years had underpinned a stable dong during the period.
Economist Dinh The Hien assumed that with an annual inflation rate of 6-6.5 per cent, the pressure on the exchange rate would be insignificant.
“The exchange rate should remain on an even keel until the year’s end and the gap between official and parallel market exchange rates should close,” Hien predicted.
According to international analysts, the State Bank’s devaluation of the dong by 1 per cent against US dollars in late June did not reflect Vietnam’s foreign currency tension.
“From 2011, Vietnam’s exports always surpassed those of their neighbours and the country’s 16 per cent jump in export value in the year to date was quite impressive. Vietnam could have a $5 billion current account surplus this year, helping the dong to remain in a stable position in later part of 2013,” said a source at asset management firm Dragon Capital, who declined to be named.
Similarly, the dong-dollar exchange rate would be pegged at VND21,800 by the year-end, according to a recent HSBC forecast.
The average inter-bank dong-dollar exchange rate was set at VND21,036 on August 16.
“My stance from early 2013 is that the exchange rate hike will be below 3 per cent this year. The rate has risen by 1 per cent so far, so that from now until the year’s end it may increase by another 1 per cent at most. The State Bank is in a position to control the change,” said economist Tran Du Lich, member of the National Financial and Monetary Policy Council.
According to Korea Investment & Securities’ Emerging Markets Department director Yun Hang Jin, the upward pressure on the exchange rate would continue until the year-end, but growth would not exceed 1 per cent, entailing low profitability for foreign exchange investments.
“Foreign currency demand is highly unlikely to rise due to ample sources, and this has led to depreciation in the dollar,” said Jin.
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