Topic: usd

The State Bank of Vietnam will auction 16,800 taels (approximately $664,000 USD) of SJC gold bars, with a reference price of $3,233 USD per tael.

The State Bank of Vietnam has begun selling US dollars to curb a rapidly appreciating exchange rate, offering relief to banks with negative foreign currency positions.

Under pressure from global USD prices and rising demand for foreign currencies, the State Bank of Vietnam (SBV) is trying to identify a new exchange rate intervention point. The USD selling rate has been increased from VND23,700 to VND23,925. This is the fourth time the SBV has increased the price this year, totaling VND905, or 3.9 per cent.

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.

Viet Dragon Securities (VDSC) has said that in the context of central banks in other countries not dealing resolutely with high inflation, the USD may return to its peak established in early 2022. This means that pressure will inevitably be on the VND/USD exchange rate, and the VND could depreciate 4-5 per cent this year. Notably, lending interest rates will also increase sharply in the near future.

The State Bank of Vietnam (SBV) adjusted the selling price for USD from VND23,400 to VND23,700 on the afternoon of September 7. It also stopped listing the intervention buying rate. According to analysts, the decision to raise the selling price is mainly a defensive measure against upcoming US Fed interest rate hikes.

The interbank VND interest rate has fallen from 5.13 per cent per annum to 2.67 per cent, significantly narrowing the gap between VND and USD rates. This may put pressure on the exchange rate in the near term.

Mr. Tran Ngoc Bau, Founder and CEO of WiGroup, told the “WeTalk - Financial Market Prospects and Opportunities” seminar that inflation is not the most serious problem for the State Bank of Vietnam (SBV) to address, it is the USD/VND exchange rate. The actions of the SBV in recent times have, in fact, always been aimed at stabilizing the exchange rate. External factors mainly relate to US monetary policy, especially the significant strengthening of the USD.

The US Fed officially raising interest rates by 0.75 percentage points, the difference in the gold price between Vietnam and the world remaining high, and the supply of foreign currency not being favorable compared to previous years count among reasons why the VND may depreciate this year. The Vietcombank Securities Company (VCBS) believes the USD/VND exchange rate will increase in 2022 by within 2 per cent, while the Bao Viet Securities Company (BVSC) believes the State Bank of Vietnam still needs to control the exchange rate so that the VND does not depreciate too much.