Illustrative image (Source: VNA) In its economic report for May and the five first months of2017, the committee said if USD/VND exchange rate rises 1 percent, inflationwill increase 0.17 percent, while noting that the VND/USD rate in commercialbanks and the free market has shown a downward trend since early this year.
The US Federation Reserve (Fed)’s raising of short-terminterest with small adjustments has yet to cause pressure on exchange rate, itcommented.
However, in the remaining months of 2017, the exchange ratewill be affected by high foreign currency demand due to rising trade deficit,the report said, forecasting that the country may see its trade balance changefrom a surplus in 2016 to a deficit of about 3.5 percent of total exports.
In the long term, the committee held that the Vietnam dongwill be under pressure from the Fed’s road map of raising interest rate in thenext years, along with unpredictable changes in the prices of Chinese renminbiand Japanese yen.
The report also made clear that measures to settle bad debt positivelyassist the reduction of interest rate. On May 16, the Government issued Decree61/2017/ND-CP on the verification of bad debts’ initial price and mortgages,and the setting up of a council for bad debt auction. At the same time, a draftlaw on support for credit institutions’ restructuring and bad debt settlementis being finalized, and a decree on settlement of credit institutions’ bad debtmay be approved on June 20 at the earliest.
The interest rates for all terms in the interbank market hadgradually decreased to 4-4.2 percent as of May 22, down 0.8-1 percentage pointcompared to the levels at the end of April.-VNA
VNA
