Illustrative image (Source: LienVietPostBank) Hanoi (VNA) – The State Bank ofVietnam (SBV)’s recent response to the continuous rise of USD prices has demonstratedits readiness to make an intervention in order to stabilise the foreignexchange market.
Shortly after the US Federal Reserve (Fed)raised interest rates on June 14, greenback prices in Vietnam increasedcontinually and even exceeded 23,000 VND per USD.
Facing this fact, the central bank said it isready to intervene to stabilise the market, and it has sufficient resources todo that. Evidence of this message is that the SBV Operations Centre cut downthe USD selling price to 23,050 VND on July 3 afternoon, 244 VND down from itsmorning’s rate, and 264 VND lower than the ceiling rate of the day’s referenceexchange rate.
With this move, eligible market members who wantto purchase USD could buy this currency at lower prices from the SBV.
In the past, the SBV used to decrease USDselling prices at some points of time when the exchange rate became tense,which proved effective to the market back to normal shortly after that.
Likewise, this latest move of the SBV has haltedthe USD price surge in commercial banks.
SBV Governor Le Minh Hung said the aforementionedchanges in the market had been predicted by the central bank from the beginningof the year. They were mainly caused by objective factors such as the USDappreciation in the global market and the return of trade deficit in Vietnamover the last couple of months.
He said the foreign exchange market remainedstable as of the end of June with the VND/USD exchange rate rising by almost 1percent in the first six months. Notably, the SBV purchased more than 11billion USD in the period, raising the foreign reserves to over 63.5 billionUSD.
The solutions by the Government and the SBV haveconsolidated the trust in the VND and the stability of the foreign currencymarket and exchange rates, he noted.
After the Fed’s sudden interest rate hike, Chinaand the US started the “biggest trade war in economic history” when the latterimposed new tariffs on several key Chinese imports on July 6. Later, China alsoannounced retaliatory tariffs on US goods.
The trade tension between the world’s biggest economiesis forecast to linger on and strongly influence their own economic situations,as well as global trade. It will also cause high pressure on the exchange ratefor the remaining months of 2018.
Analysts said the record foreign reserves atpresent are in good condition to ensure that the SBV is able to intervene inthe market when necessary.
Pham Thanh Ha, Director of the SBV’s MonetaryPolicy Department, said the central bank will keep a close watch on changes inthe domestic and foreign markets, including the Fed’s interest rate hike, theUS-China trade relations, movements of the European Central Bank and the Bankof Japan, and the foreign currency demand - supply balance in the domesticmarket, all in order to flexibly regulate the daily reference exchange rates.
The SBV will continue to take concerted measuresand monetary policy tools to intervene in the market, he added. -VNA
Shortly after the US Federal Reserve (Fed)raised interest rates on June 14, greenback prices in Vietnam increasedcontinually and even exceeded 23,000 VND per USD.
Facing this fact, the central bank said it isready to intervene to stabilise the market, and it has sufficient resources todo that. Evidence of this message is that the SBV Operations Centre cut downthe USD selling price to 23,050 VND on July 3 afternoon, 244 VND down from itsmorning’s rate, and 264 VND lower than the ceiling rate of the day’s referenceexchange rate.
With this move, eligible market members who wantto purchase USD could buy this currency at lower prices from the SBV.
In the past, the SBV used to decrease USDselling prices at some points of time when the exchange rate became tense,which proved effective to the market back to normal shortly after that.
Likewise, this latest move of the SBV has haltedthe USD price surge in commercial banks.
SBV Governor Le Minh Hung said the aforementionedchanges in the market had been predicted by the central bank from the beginningof the year. They were mainly caused by objective factors such as the USDappreciation in the global market and the return of trade deficit in Vietnamover the last couple of months.
He said the foreign exchange market remainedstable as of the end of June with the VND/USD exchange rate rising by almost 1percent in the first six months. Notably, the SBV purchased more than 11billion USD in the period, raising the foreign reserves to over 63.5 billionUSD.
The solutions by the Government and the SBV haveconsolidated the trust in the VND and the stability of the foreign currencymarket and exchange rates, he noted.
After the Fed’s sudden interest rate hike, Chinaand the US started the “biggest trade war in economic history” when the latterimposed new tariffs on several key Chinese imports on July 6. Later, China alsoannounced retaliatory tariffs on US goods.
The trade tension between the world’s biggest economiesis forecast to linger on and strongly influence their own economic situations,as well as global trade. It will also cause high pressure on the exchange ratefor the remaining months of 2018.
Analysts said the record foreign reserves atpresent are in good condition to ensure that the SBV is able to intervene inthe market when necessary.
Pham Thanh Ha, Director of the SBV’s MonetaryPolicy Department, said the central bank will keep a close watch on changes inthe domestic and foreign markets, including the Fed’s interest rate hike, theUS-China trade relations, movements of the European Central Bank and the Bankof Japan, and the foreign currency demand - supply balance in the domesticmarket, all in order to flexibly regulate the daily reference exchange rates.
The SBV will continue to take concerted measuresand monetary policy tools to intervene in the market, he added. -VNA
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