HCM City sees falling remittances from abroad hinh anh 1Illustrative image (Source: AFP/VNA)

HCM City (VNA) - Remittances into Ho Chi Minh City have shown signs of slowing down and is estimated to reach five billion USD this year, 11 percent short of the year’s expectation.

Banking experts attributed the slowdown to changes in the US market under impacts from the US President election in November, but they expected the flow will increase around the Lunar New Year Festival which falls in late January 2017.

According to Deputy Director of the State Bank of Vietnam’s Ho Chi Minh City branch Nguyen Hoang Minh, remittances from the US account for about 60 percent of the total amount. Therefore, any changes in the market will remarkably affect the flow of remittances into Vietnam.

Minh pointed to several reasons for the falling remittances from the US market, saying that the possibility that the Federal Reserve (FED) would raise its interest rate late this year prompted many to keep their USD instead of sending the money to Vietnam where the interest rate for deposits in USD is zero percent.

Besides, no clear improvement related to the Trans Pacific Partnership (TPP) also reduces the investment amount in Vietnam, Minh added.

The drop in overseas remittances will affect the supply of capital for production and business activities, but not much, since the State Bank has put in place several exchange rate control policies. At the same time, there are other sources of foreign currencies in the market, such as export and tourism. 

Discussing recent fluctuations in the current USD/VND exchange rate, Le Anh Tuan, Deputy Director General of the UK-based Dragon Capital Group said the changes of 1 – 2 percent are small, saying that psychological factor seems to be the force behind the changes.

Nguyen Hong Hue, Vice Chairman of the Association of Overseas Vietnamese Entrepreneurs underlined the potential for Vietnamese overseas making investment at home, particularly in the hi-tech, banking and service sectors.

As of the end of November, remittances to HCM City totaled 4.36 billion USD. The figure is expected to increase with around 120,000 and 130,000 Vietnamese overseas to return home on the traditional Tet (New Year) holiday.-VNA