Central exchange rates have consecutively been adjusted up since the beginning of 2018, from 22,415 dong/US dollar on December 31, 2017 to 22,605 dong/US dollar on May 29, 2018 (equal to an increase of 0.8 percent).
The reason came from the appreciation of the US dollar in the world market along with the recovery of the US economy and the interest rate increase policy of the U.S Federal Reserve (Fed) but the increase of the central exchange rate in the country is much lower than that of the US dollar (2.6 percent) in the world market.
However, the on-going move of central exchange rate (an increase of 50 dong in May) of the regulator immediately raised concerns about the appreciation of the US dollar.
In a comment about exchange rate at the beginning of June 2018, analysts of Bao Viet Securities Company (BVSC) pointed out that compared to the beginning of the year, the index of the US dollar has currently increased 2.6 times.
The increase of the central exchange rate over the last period was reasonable when it matches the positive trend of the world. “In another perspective, the net selling move of foreign investors in Vietnam stock market over the last period was mainly order matching.
If including put-through transactions, foreign capital is still flowing into the stock market with the net purchase value of $1.5 billion since the beginning of this year”, said BVCS.
Along with that BVSC said the active devaluation of dong by the State Bank helps ensure the competitiveness of Vietnamese exports.
Though the aforementioned increase in exchange rate is consecutive, the margin is still quite small (less than one percent) so it has not greatly affected the current macro-economic situation.
BVSC said not much risk for exchange rate is seen during the remaining period of 2018.
With the sharp increase of CPI (up as much as 0.55 percent in May), banking experts Dr Can Van Luc said exchange rate will increase but not much worrisome.
A factor that can affect exchange rate, said Luc, is that in order to maintain the inflation rate of four percent in this year, we will have to be very determined.
For example, we must consider the price increase of some items to have suitable roadmap, and have to cooperate between monetary policy, fiscal policy and prices to ensure that CPI will not increase too fast and boom at the end of the year.
*The 23,000 dong/US dollar threshold cannot be broken
The exchange rate on June 6 was announced by the State Bank at 22,567 dong, down four dong from the previous day. Meanwhile, the US dollar price at some commercial banks on June 6 was also adjusted down.
Specifically, Vietcombank listed the US dollar at 22,775-22,845 dong/US dollar, down 10 dong in both rates from the previous session.
In the free market, the purchase price was 22,860 dong/US dollar, down 10 dong and the selling price was 22,875 dong/US dollar, down 15 dong compared to the end of June 5.
According to Nguyen Duc Do (Ministry of Finance), the rising trend of exchange rate has been formed over the last many days. “The strong increase on May 29 can be partly because of inflation concerns after the general Department of Statistics released new data.
It is very difficult to forecast about the upward/downward trend of the US dollar in the international market in the near future. However, whatever the US dollar fluctuates in the world market, with the current foreign currency and foreign exchange reserves, the State Bank will not let exchange rate to surge. “The milestone of 23,000 dong per US dollar is unlikely to be broken from now till the end of 2018″, forecasted Do.
A bank staff told Tien Phong that looking at the foreign capital flow to Vietnam since the beginning of this year, especially the short term capital flow via the stock market, we are going to feel happy.
Billions of US dollars are attractive sources of investment that significantly support the economy, not to mention large amounts of money to purchase Sabeco. However, the banker also said the State Bank must always take precaution and has balanced tools to keep exchange rate stable.
