A customer sells US dollars at a bank in Hanoi. (Photo: VNA)
Hanoi (VNS/VNA) - The period of strong volatility of the USdollar has ended, and the USD/VND exchange rate in the last six months of 2023will remain stable, experts have forecast.
According to experts of Yuanta Vietnam Securities Company, theUSD/VND exchange rate from the beginning of 2023 fluctuated around a range of +/- 1.9% at 23,240 - 23,630 VND per dollar, much more stable than in 2022 whenthe rate sometimes peaked at 24,692 VND per dollar, up 4.2% against the StateBank of Vietnam (SBV)’s reference exchange rate.
As of the beginning of June, the USD/VND exchange rate decreasedby about 0.52% compared to the start of 2023 thanks to the abundant supply offoreign currency from the trade balance surplus, disbursed FDI inflows,international tourism recovery and the weakening of the dollar.
According to the experts, there are a number of factors thatpositively support the exchange rate in the second half of this year.
First, Vietnam’s foreign exchange reserves have grown again. Afterstrong fluctuations in the monetary market in 2022, the nation’s foreignexchange reserves at the end of 2022 reached about 90 billion USD. In the firstfive months of 2023, the SBV bought about 6 billion USD to add to foreignreserves.
Second, the country’s trade balance recorded a surplus in thefirst five months of this year. Although import-export turnover in the firstfive months of 2023 was low, the trade balance maintained a trade surplus of 9.8billion USD, a sharp increase compared to 2021 and 2022.
Third, Vietnam’s tourism industry is recovering. After three yearsof being affected by the COVID-19 pandemic, the number of tourists to Vietnamin the first five months of 2023 rose 13 times compared to the same period in2022 and equivalent to 63% compared to before the pandemic in 2019.
International tourists will recover faster in the near future, especially fromChina in the summer and early fourth quarter of 2023. This will also be asignificant source of foreign currency for the country.
Fourth, FDI has shown more positive signals. Although accumulatedFDI in the first five months of 2023 decreased slightly compared to the sameperiod last year, the data in April and May 2023 showed more positive signalsthanks to the gradually improving macro factors. Though more observations areneeded, Yuanta holds a positive view on FDI inflows in the medium and longterm, adding this is also a significant supporting factor for the dollarflowing into Việt Nam.
Fifth, the US Federal Reserve (Fed) may soon stop raising interestrates. Yuanta said though it is likely that the Fed will raise interest ratesat least one more time this year, the tightening of interest rates has beenloosened more and the period when the dollar was anchored at a high level as2022 ended.
Sixth, Vietnam’s remittances are expected to continue to increase.In addition to the amount of remittances sent back to relatives that remainsstable, Yuanta’s analysts expect the amount of remittances sent to invest inVietnam will increase more when the domestic economy recovers, deposit interestrates remain at an attractive level and real estate is at low prices, while theeconomies in the EU and the US are recovering more slowly than in Vietnam.
With the above factors, Yuanta believes the period of strongexchange rate fluctuations in the second half of 2022 has ended and theexchange rate in the last six months of 2023 will continue to be stable andfluctuate in a range of +/- 3%, below the SBV’s prescribed range of +/- 5%.
However, Yuanta noted, a number of other factors that may putpressure on the exchange rate should be monitored, such as high inflation indeveloped countries, the reopening of China and the Fed’s longer-than-expected interestrate hike.
Sharing the same view, finance expert Dr. Can Van Luc said as thedollar devaluates and the US economy is forecast to have lower growth, it islikely that the Fed will not continue to raise interest rates until the end ofthis year, and other currencies, including the Vietnamese Dong, will appreciate again.
Luc predicted the USD/VND exchange rate for the whole of 2023 willbe stable. /.
