Banks cut the USD/VND exchange rate by some 15-40 VND per USD on December 28 (Photo: VNA) Hanoi (VNS/VNA) - Commercial banks haveconsecutively lowered the value of the US dollar against the Vietnamese dongduring the final days of 2018, helping the USD/VND exchange rate close the yearunder control.
The exchange rate at commercial banks dropped sharply over threedays since December 26, pushing the rate below the threshold of 23,300 VND perdollar, the lowest level since September 21 this year.
On December 28 alone, banks depreciated the dollar againstthe VND by some 15-40 VND per USD.
The decline was notable especially when the central bankconsecutively raised the daily reference USD/VND exchange rate. On the lastworking day of 2018, the State Bank of Vietnam (SBV) continued to adjust therate upwards by 20 VND to 22,825 VND/USD. With the current trading band of /-3 percent, commercial banks were allowed to sell the dollar at the cap of 23,509VND and the floor rate of 22,141 VND on the day.
During the day, SBV’s transaction office also kept the buyingand selling rates of dollars to commercial banks unchanged from the previousday at 22,700 VND and 23,439 VND per dollar, respectively.
According to data from the National Financial SupervisoryCommission (NFSC), the VND was relatively stable against the dollar in 2018,with the central bank’s daily reference USD/VND exchange rate increased byabout 1.5 percent compared to the beginning of the year while the rate listedat commercial bank increased by about 2.8 percent.
The commission attributed the slight increase of domesticexchange rate to international factor of the US dollar index rising about 5 percentagainst the beginning of the year and up 9 percent compared to the bottom inFebruary 2018, as well as domestic inflation pressures.
However, the rise was slight thanks to positive support fromthe country’s balance of supply and demand of foreign currency, NFSC noted.
Reports from Bao Viet Securities (BVSC) also showed that the VNDis among the currencies that have stiff resistance against the US FederalReserve (Fed)’s lending rate increases, and Vietnam is the only country inSoutheast Asia that has not taken its cue from the Fed.
According to the NFSC, the stable exchange rate hascontributed to the country’s macroeconomic stability and inflation control,thereby strengthening the confidence of foreign investors in the Vietnameseeconomy.
NFSC also predicts that the pressure on the exchange ratewill be reduced in 2019 as both domestic and international factors tend to bemore favourable than in 2018.
Specifically, the US dollar will possibly not increase muchor even weaken while domestic inflation will be controlled at about 4 percentsince the global commodity prices do not increase much; and the pressure on theexchange rate will decrease.
Though believing the pressure on the VND in 2019 will not beas high as in 2018, BVSC analysts said prudence is needed and the central bankwill likely maintain tight liquidity policy in 2019, with the dong injectioninto the market in 2019 to be not as much as in the first half of 2018.
The SBV protects the value of the VND by reducing liquidityof the banking system, and the bank will maintain its strict liquiditymanagement to counter Fed’s lending rate gains in 2019, BVSC analysts said.-VNS/VNA
VNA
