Increased foreign exchange reserves, State Bank of Vietnam (Central Bank) to stabilize exchange rate

Increased foreign exchange reserves, State Bank of Vietnam (Central Bank) to stabilize exchange rate

Between the beginning of this year and April 17, the State Bank of Vietnam (Central Bank) purchased US$8.35 billion from financial institutions, building up the country's foreign exchange reserves.

According to the latest report sent by the State Bank of Vietnam to the National Assembly's Economic Committee:

“The USD/VND exchange rate and the foreign exchange market were relatively stable, and market liquidity was also good during the first four months of the year.”

With the additional purchase of US$8.35 billion, Vietnam's foreign exchange reserves are expected to double to US$67.35 billion from the level recorded three years ago.

The stable foreign exchange market has allowed the State Bank of Vietnam to further increase its foreign exchange reserves over the past year. An additional US$6 billion was purchased last year, according to Le Minh Hung, governor of the State Bank of Vietnam.

A Fitch Group macroeconomics analyst said:

“The State Bank of Vietnam is actively buying foreign currency to ensure currency stability. This has the potential to minimize volatility in the dong over the coming months.” We expect foreign exchange markets to remain stable this year, supported by strong inward foreign direct investment, robust current account surpluses and aggressive central bank intervention."

Fitch predicts an average of VND23,440 per dollar.

Fitch's view on foreign direct investment and the current account balance is as follows:

We expect Vietnam's strong economy to continue to attract inward FDI in the real estate sector. The real estate business attracted a total of US$6.6 billion in foreign direct investment in 2018, more than double the US$3.1 billion in 2017.

We expect Vietnam's current account surplus to be around 2.1% of GDP in 2019, down slightly from 2.2% in 2018.

Changes in Vietnam's foreign exchange reserves

• 2015 US$28 billion
• 2016 US$36.5 billion
• 2017 US$49.1 billion
• 2019 US$ 67.4 billion (as of April 2019 – following this report)

See World Bank Indicators for 2015-2017 FX Reserves

 

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