Topic: VND

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.

Mr. Alain Cany, President of the European Chamber of Commerce in Vietnam (EuroCham), told VnEconomy / VET that while devaluations of the VND have increased over the last two weeks, the currency remains strong, is improving, and is holding up better than many other currencies. The State Bank of Vietnam (SBV), he said, has been doing a good job.

Standard Chartered Bank has raised its GDP growth forecast for Vietnam from 6.7 per cent to 7.5 per cent for 2022 and from 7 per cent to 7.2 per cent for 2023. While identifying inflation as a threat to economic recovery, the bank lowered its inflation forecast in 2022 from 4.2 per cent to 3.3 per cent, but in 2023 has increased it to 5.5 per cent. It also forecast that depreciation of the VND will slow in the months to come.

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.

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.

At a government meeting on the morning of September 22, Prime Minister Pham Minh Chinh said that, in the context of an unpredictable global situation, monetary and fiscal policy orientations must be effective and coordinated closely with other policies to stabilize the macro-economy. He asked the State Bank of Vietnam (SBV) to research and raise the operating interest rate and the deposit rate but to try to keep the lending rate stable.

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.