The Vietnam Dong (VND) is among the most stable currencies in Asia this year. (Source:VNA) Hanoi(VNA) – The Vietnam Dong (VND) is among the most stable currencies in Asia thisyear, said the US-based Bloomberg News, echoed by similar views from Vietnameseeconomists who were confident that the stability would remain until the yearend thanks to the economy’s positive signs.
The currency hasbeen kept stable, weakening about 1 percent against the US Dollar since thestart of this year. An increase in remittances was behind this, said Can VanLuc, a member of the National Financial and Monetary Advisory Council.
Remittances fromVietnamese living abroad were worth 13.4 billion USD in 2016, up 3 percent fromthe previous year, according to latest statistics by the World Bank. Theremittances are forecast to grow 5-7 percent to exceed 14 billion USD thisyear, taking Vietnam to the top 15 countries with the biggest remittances, henoted.
The risingremittances have helped the country ensure enough dollar supply to meet thedomestic demand and allowed the State Bank of Vietnam (SBV) to boost forexreserves. “Such a high level of foreign reserves will allow us to step in tostabilize the money market when needed”, said SBV deputy governor Nguyen ThiHong on the sidelines of a meeting last month.
The central bank hasadopted a more market-based management mechanism with reference exchange ratesset on a daily basis since January 2016 in its effort to maintain the VietnamDong’s value.
Luc added that surgein foreign direct investment (FDI) has also helped stablise the currency. TheMinistry of Planning and Investment’s Foreign Investment Agency reported thatVietnam drew in 28.24 billion USD in FDI in the first 10 months of this year,12 percent higher than the country’s yearly target of 25 billion USD. The FDIdisbursement was estimated at 14.2 billion USD during the period, up 11.8percent year-on-year.
In addition, Vietnamhas also witnessed a growth in foreign indirect investment over the pastseveral years. Foreign investors have poured 4.2 billion USD into the localstock market in the first three quarters of the year, a 3-fold increase from2016, according to Director of the Business Development Institute Le XuanNghia.
Ho Chi Minh City ledthe way in both FDI attractions and remittances. The southern economic hublured around 5.03 billion USD in the first 10 months, doubling the year-on-yearfigure. In 2016, overseas remittances to the city reached 5 billion USD,accounting for 57-58 percent of the national total, a year-on-year rise of 11percent. It aims a 10 percent growth to 5.5 billion USD this year.
More pressure willbe likely on the Vietnam Dong at the end of the year due to the US FederalReserve’s forecast benchmark interest rate rise and higher demand for foreignexchange from importers ahead the Lunar New Year holiday.-VNA
VNA
