Illustrative image. (Photo: VietnamPlus) Hanoi (VNA) - The collapse of the Silicon Valley Bank (SVB) and Signature Bank of the US and Credit Suisse of Switzerland has attracted public attention and made many investors worried. However, experts said it will not create a substantial risk to the Vietnamese economy, saying the depreciation of the US dollar helps the State Bank of Vietnam (SBV) have room to stabilise the exchange rates and interest rates this year.
The current Silicon Valley Bank crisis has little impact on Asian markets, including Vietnam, mainly due to the recovery of the Chinese economy, the experts said.
China's real estate-credit market has passed the most difficult period when home sales began to grow positively from February 2023. On the other hand, the weaker US dollar after the Silicon Valley Bank collapse is also a positive factor for emerging countries.
Currently, the US dollar index (DXY) plunged to 103.86 points, down 1.3% after the collapse of the Silicon Valley Bank.
An expert of VNDIRECT Securities Company (VNDIRECT) said that he expected the pressure on the VND exchange rate to decrease as the US Federal Reserve (Fed) slows down the interest rate hike after the Silicon Valley Bank incident.
Besides, the improvement of Vietnam's trade balance and balance of payments in 2023 will support the VND exchange rate, the expert noted, adding that they maintain their view that the USD/VND exchange rate will fluctuate between 23,400-23,800 VND/USD by the end of this year.
Experts say that the current Silicon Valley Bank crisis has little impact on Asian markets, including Vietnam.(Photo: VietnamPlus) Concurred with VNDIRECT’s expert, another expert from KB Securities Vietnam (KBSV) said the Fed's halt of the interest rate hike at the end of the second quarter of 2023 is expected to support the loosening monetary policy of the SBV, when the US dollar depreciates, reducing pressure on the exchange rate. If the trend continues, it may create conditions for the SBV to buy the US dollar to increase foreign exchange reserves.
According to VinaCapital's analysis, the collapse of the Silicon Valley Bank and Credit Suisse will ultimately benefit Vietnam as both are likely to lead to a strengthening of the Vietnamese dong against the US dollar, which in turn will enable the SBV to re-accumulate a significant amount of foreign exchange (FX) reserves this year.
This will inject significant Vietnamese dong liquidity into the economy because the SBV usually accumulates FX reserves via "unsterilised" interventions in the FX market, resulting in an increase in the country’s monetary base.
VinaCapital expected the rapid decline of interest rates in the US and the world will support the Vietnamese dong’s appreciation, helping the SBV to accumulate FX reserves this year.
In fact, the reference exchange rate has continuously decreased in recent sessions. The interbank rate also fluctuated in a downtrend in the past week.
Experts said that as the current exchange rate is still stable, the State Bank of Vietnam has taken the right step by lowering interest rates to reduce difficulties for the economy. (Photo: VietnamPlus) The exchange rate was stable and even continued to cool down even though the SBV had just lowered the operating interest rate, reflecting that the liquidity of the system was relatively abundant. Since January this year, the SBV has purchased foreign currency from credit institutions to supplement the state's FX reserves and put a large amount of Vietnamese dong into circulation.
VinaCapital also said that the SBV increased the operating interest rate in September and October 2022 to assist the value of the Vietnamese dong and it also accelerated the withdrawal of liquidity from the money market in recent weeks by issuing treasury bills to ensure that the interbank interest rate in Vietnamese dong is higher than the interest rate in US dollar./.
