Central bank to intervene when USD/VND exchange rate increases sharply hinh anh 1

Hanoi (VNA) - In the two consecutive sessions, the USD/VND exchange rate at commercial banks continuously increased, the USD selling price in the morning of May 8 continued to increase by 15 – 30 VND compared to the previous afternoon.

Currently the buying price at Vietcombank is about 23,300 dong/USD and selling price, 23,420 dong / USD, up 25 dong comparing to the previous session.

At VietinBank, the USD exchange rate also increased by 10 dong, currently the bank is trading around 23,295 - 23,415 dong / USD.

The BIDV is currently trading around 23,300 - 23,420 dong (buying - selling), increasing by 20 dong; Eximbank listed the purchase price of USD at 23,310 VND / USD and selling price at 23,410 / USD, an increase of 30 VND per USD compared to the previous day.

If compared to the first day of the price increase (May 6), every USD in commercial banks increased by about 80-90 VND/USD, about 150 VND compared to the price range of 23,150 - 23,250 VND/USD that has been well-maintained from the beginning of the year. The dollar has set a new "peak" since the beginning of the year.

Pham Hong Hai, General Director of HSBC Vietnam, said that the sharp increase in the exchange rate in the past few days has both internal and external causes.

According to Hai, for internal reasons, the banks themselves have expected a large amount of indirect investment in the market, however, this transaction has not happened. Meanwhile, banks have sold USD in advance to the State Bank to keep the status, expecting that when this transaction takes place, they would be able to buy USD at low prices.

As for the external causes, Hai said that US-China trade tensions caused a great impact on the market sentiment.

“Trump's tweet does not affect the supply and demand of foreign currencies of Vietnam but the market’s psychology. Last week, the Yuan also depreciated more than 1%, many other currencies were also volatile. The general psychology is that when there are instabilities, most will seek shelter and the US dollar is still a channel for greater peace of mind,” Hai emphasized.

USD is considered the safe haven currency, so if there is any fluctuation, investors will come back to hold this currency and make sure that the USD will appreciate against other regional currencies. .

"However, Vietnam has its own advantages, in fact, in recent years, VND is the most stable currency in the region, although currencies of some other countries such as Malaysia, Thailand and India fluctuate greatly but the VND still maintains stability. I believe that in the current favorable situation, this is an opportunity to maintain macroeconomic stability," Hai said.

Central bank to intervene when USD/VND exchange rate increases sharply hinh anh 2Transaction at the bank (Source: VNA)

Finance and banking expert Can Van Luc also said that this movement was mainly due to the external market, mainly due to the sharp increase in US economy in the first quarter that caused the US dollar to go up, despite the risks of trade war.

At the 2019 Banking Panorama held on May 8, referring to the foreign exchange market, Deputy Governor of the State Bank of Vietnam Nguyen Thi Hong stated, when the State Bank purchases foreign currencies, it means the State bank supplies huge amount of money to the market. Foreign exchange reserves are impressed by the increase in absolute value. However, the openness of the economy, domestic production still depend on imports of raw materials and goods, so it is necessary to continue accumulating foreign exchange reserves.

According to Hong, the exchange rate is not only affected by macroeconomic situation but also influenced by market expectation. In case of instability, the State Bank will buy foreign currencies. The application of compulsory reserve will affect the liquidity, making it difficult for credit institutions. Therefore, the State Bank should issue bills to help with credit institutions flexibility. Thus, the State Bank can accumulate money without affecting the market interest rates./.