Topic: currency

Treasury satisfied with the progress made by Vietnam and will continue to engage closely with the central bank on currency issues.

The appreciation of the USD against the VND is generally of benefit to exporters, but will also prove disadvantageous if these businesses import raw materials, resulting in higher import costs and transportation costs, and financial difficulties if they have taken out loans in the dollar. Currency fluctuations also trigger inflation in Vietnam’s key markets, reducing purchasing power and significantly affecting export orders.

The selling price of USD at the State Bank of Vietnam (SBV) and commercial banks is still much lower than the ceiling, despite inflation rising in the US and major currencies depreciating against the dollar. According to analysts, while the US Fed is set to raise interest rates, demand for foreign currency in Vietnam has not shown any strong increase.

In the latest report on macro-economic and foreign exchange policy from the US Department of the Treasury, the US continues to recognize that Vietnam is not a currency manipulator. The Department also appreciates the management of monetary and exchange rate policies by the State Bank of Vietnam in recent times.

Figures from KIS Securities show that in the week May 30 to June 3, inflows from exchange-traded funds (ETFs) into Southeast Asia reached $145 million and rose the highest for eight years, with Vietnam alone attracting $85 million. The fact that the VND is gaining against other currencies is a positive factor supporting net withdrawals by ETFs.