Positive exchange rates

VCN –During the Covid-19 pandemic, many currencies fluctuated strongly due to concerns from investors, whose psychology of hoarding cash was stronger than investing in risky assets. However, foreign exchange rates, especially the exchange rate between VND and USD, have not changed much, contributing to ensure domestic macroeconomic stability.  
positive exchange rates
The VND exchange rate is more stable than many other currencies. Photo: ST

More stable than other currencies

According to the report of the State Bank (SBV), due to the negative impact of the Covid-19 pandemic on economic growth in general and enterprises’ operation in particular, the SBV and the credit institution system have focused all resources to control inflation, stabilize the macro economy, promptly remove difficulties for production and business activities, and support businesses.

The SBV has regulated the exchange rate in line with the macro situation, inflation, market movements and monetary policy targets. Specifically, continuously publishing the central daily exchange rate with reference to market movements, macroeconomic balances, currencies and monetary policy goals; synchronously coordinate with other solutions and tools on regulating liquidity, and interest rates in VND to stabilize exchange rates and markets; readjust reduction of selling exchange rate and be ready to sell intervention foreign currencies to stabilize the market, contributing to macroeconomic stability.

Over the past four months, although the exchange rate has increased compared to the end of 2019, the foreign currency market was basically stable, the market sentiment was not disturbed, especially the balance of supply and demand of foreign currencies was favorable, and market liquidity was smooth.In fact, the movement of exchange rate was stable, exceptfor a sharpincrease in the last week of March.At that time, the SBV reassured and saidthey were willing to sell exchange rate interventions to stabilize the market if necessary, so the exchange rate quickly returned to stability.

By the end of the first quarter, the exchange rate only fluctuated within a range of 1.3-1.5%. According to a representative of the SBV, the VND was much more stable than other currencies of many regional and global trading partners. Specifically, by the end of April, the Chinese Yuan (CNY) fell 1.73%, the Euro dipped 4.19%, the South Korean Won dropped 6.90%, the Thai Baht fell 9.23%, the Malaysian Ringgit decreased by 6.59%, the Singapore Dollar fell 5.88%, and the Indian Rupiah fell 11.06% compared to the end of 2019.

The USD price index in April increased by 0.95% over the previous month; up to 1.47% compared to December 2019 and rose 1.15% over the same period last year. According to the General Statistics Office, this increase was due to the fact that the world financial market has showed signs of decline, and investors have tended to hold cash. At the same time, according to the negative forecasts of the banking system in some countries, it might have to restructure capital due to the serious impact of the long-lasting Covid-19 pandemic, so the USD in the global market went up, affecting domestic prices.

Much pressure

Experts of Bao Viet Securities Company (BVSC) said maintaining the momentum of exchange rates like last time was a great effort. The USD has been strengthened in the global market, which was the main reason that the USD/VND exchange rate tended to increase in the end of March.

The Covid-19 pandemic has led to a sharp decline in the global financial market, the need to withdraw capital from risky assets and look for safe assets, which were the main reason for the sharp increase in the USD.

We do not "rejoice" too soon in the stable movements of the exchange rate mentioned above, because the Covid-19 pandemichas been complicated and changeable. The pressure has been on the exchange rate as well as how the SBV manages it. According to financial expert Dr. Nguyen Tri Hieu, the upward trend of the VND/USD exchange rate was clear, but in the near future, it depends on the evolution of the Covid-19 pandemic. If the pandemic persists, the pressure of increasing exchange rate will be available.

For the SBV, the management of a stable exchange rate is not only to stabilize the foreign exchange market but also to solve the balance problem for import-export, public debt, and inflation. Therefore, if the market is unstable andthe VND is devalued, it will greatly affect the macro economy. Thus, although the pressure on the exchange rate is real, the regulator will put many "life buoys" to stabilize the foreign exchange market.

In particular, the most notable is the SBV’s high foreign exchange reserves. With this reserve, experts believethe SBV was capable of intervening in the market when necessary to stabilize the foreign exchange market. Therefore, it is not easy for investors to "surf" and make profits based on exchange rate fluctuations. This will effectively support import-export businesses and goods circulation without price fluctuations, or even turn "challenges into opportunities" when enjoying exchange rate differences.

By Huong Diu/ Ha Thanh

Related News

Stipulate implementation of centralized bilateral payments of the State Treasury at banks

Stipulate implementation of centralized bilateral payments of the State Treasury at banks

VCN - The Ministry of Finance (MOF) gathers feedback on the draft Circular regulating the management and use of accounts of the State Treasury opened at the State Bank of Vietnam (SBV) and commercial banks.
Difficulty in finding banks eligible to receive compulsory transfers

Difficulty in finding banks eligible to receive compulsory transfers

VCN - Reporting to the National Assembly, the State Bank of Vietnam (SBV) said that one of the difficulties in restructuring the credit institution system is the long process of finding and negotiating banks eligible to receive compulsory transfers.
How does the Fed

How does the Fed's interest rate cut affect Vietnam?

VCN - In the latest meeting of the Federal Open Market Committee (FOMC), the Fed decided to cut interest rates by 50 basis points to a range of 4.75%-5%. Analysts have given different perspectives on this decision.
Pressure on exchange rate plunges

Pressure on exchange rate plunges

VCN – The State Bank of Vietnam (SBV) has taken measures including intervening in the foreign exchange market and tightening liquidity to reduce pressure on the Vietnamese dong exchange rate.

Latest News

M&A activities show signs of recovery

M&A activities show signs of recovery

Mergers and acquisitions (M&A) activities in Vietnam have been showing signs of recovery in recent months as several large companies announced finished deals, which may create a ripple effect in the M&A market.
Fiscal policy needs to return to normal state in new period

Fiscal policy needs to return to normal state in new period

VCN - To recover the economy during and after the Covid-19 pandemic, fiscal policy has been flexibly and promptly managed, becoming a solid foundation to help businesses and the economy gradually overcome difficulties. After nearly 5 years, although there are still difficulties, the economy is gradually returning to a high growth trajectory. In that context, it is necessary to let fiscal policy return to normal state.
Ensuring national public debt safety in 2024

Ensuring national public debt safety in 2024

VCN - Since the beginning of the year, public debt management has been conducted proactively and effectively, meeting the need of raising capital for development investment. At the same time, debt indicators by the end of 2024 are guaranteed within the ceiling and safety threshold approved by the National Assembly, ensuring national financial security, increasing proactive response to risks arising from external and internal causes of the economy.
Removing many bottlenecks in regular spending to purchase assets and equipment

Removing many bottlenecks in regular spending to purchase assets and equipment

VCN - Decree No. 138/2024/ND-CP, which has just been issued, is expected to contribute to resolving bottlenecks in allocating funds for purchasing assets and equipment; renovating, upgrading, expanding, and constructing new construction items in projects that have been invested in and constructed in the past.

More News

Continue to handle cross-ownership in banks

Continue to handle cross-ownership in banks

VCN - The situation of excess share ownership, cross-ownership between credit institutions (CIs), CIs and enterprises, although has decreased significantly compared to previous periods, is still complicated and requires continued inspection and control.
Striving for average CPI not to exceed 4%

Striving for average CPI not to exceed 4%

VCN - According to the report of the Ministry of Finance, there are still some factors that put pressure on price levels in the remaining months of 2024, so the Ministry has updated 2 scenarios of average inflation in 2024 increasing in the range of 3.7-3.92%.
Delegating the power to the government to waive, lower, or manage late tax penalties is suitable

Delegating the power to the government to waive, lower, or manage late tax penalties is suitable

VCN - Discussing in groups about the project "1 law amending 7 laws" in the financial sector according to the program of the 8th Session on October 29, 2024, National Assembly delegates proposed that the Government should be assigned to make specific regulations on decentralization, granting the right to exempt and reduce taxes, and handling penalties for late payment of taxes...
Removing difficulties in public investment disbursement

Removing difficulties in public investment disbursement

VCN - According to the report of the Investment Department (Ministry of Finance), the estimated disbursement from the beginning of the year to October 31, 2024 is VND 355,616.1 billion, reaching 47.43% of the 2024 plan, reaching 52.29% of the plan assigned by the Prime Minister.
State-owned commercial banking sector performs optimistic growth, but more capital in need

State-owned commercial banking sector performs optimistic growth, but more capital in need

VCN - According to the report sent to the National Assembly before the 8th Session of the Government on investment, management and use of state capital in enterprises nationwide in 2023, the business performance of the state-owned commercial banking sector achieved positive growth.
Rush to finalize draft decree on public asset restructuring

Rush to finalize draft decree on public asset restructuring

VCN - According to the Ministry of Finance, the draft Decree regulating the rearrangement and handling of public assets is being urgently completed by the Ministry of Finance to submit to the Government for promulgation.
Inspection report on gold trading activities being complied: SBV

Inspection report on gold trading activities being complied: SBV

The State Bank of Vietnam (SBV) has announced that inspections on compliance with legal policies in gold trading activities of credit institutions and gold trading businesses have been completed and an inspection report is being compiled.
Budget revenue in 2024 is estimated to exceed the estimate by 10.1%

Budget revenue in 2024 is estimated to exceed the estimate by 10.1%

VCN -The Government estimates that state budget revenue in 2024 will exceed VND 172.3 trillion, up 10.1% over the estimate, of which tax and fee revenue will reach 13.1% of GDP.
Ensure timely and effective management and use of public asset

Ensure timely and effective management and use of public asset

VCN – In order to promptly and effectively implement public asset management and use, ensuring compliance with legal regulations, the Ministry of Finance has just issued an official dispatch requesting ministries, branches and localities to comply with regulations in the Government’s Decree No. 114/2024/ND-CP dated September 15, 2024.
Read More

Your care

Latest Most read
M&A activities show signs of recovery

M&A activities show signs of recovery

Mergers and acquisitions (M&A) activities in Vietnam have been showing signs of recovery in recent months as several large companies announced finished deals, which may create a ripple effect in the M&A market.
Fiscal policy needs to return to normal state in new period

Fiscal policy needs to return to normal state in new period

VCN - To recover the economy during and after the Covid-19 pandemic, fiscal policy has been flexibly and promptly managed, becoming a solid foundation to help businesses and the economy gradually overcome difficulties. After nearly 5 years, although there
Ensuring national public debt safety in 2024

Ensuring national public debt safety in 2024

VCN - Since the beginning of the year, public debt management has been conducted proactively and effectively, meeting the need of raising capital for development investment. At the same time, debt indicators by the end of 2024 are guaranteed within the ce
Removing many bottlenecks in regular spending to purchase assets and equipment

Removing many bottlenecks in regular spending to purchase assets and equipment

Decree No. 138/2024/ND-CP, which has just been issued, is expected to contribute to resolving bottlenecks in allocating funds for purchasing assets and equipment
Continue to handle cross-ownership in banks

Continue to handle cross-ownership in banks

VCN - The situation of excess share ownership, cross-ownership between credit institutions (CIs), CIs and enterprises, although has decreased significantly compared to previous periods, is still complicated and requires continued inspection and control.
Mobile Version