Regarding to the developments of USD/VND exchange rate in the recent days, Deputy Governor Nguyen Thi Hong of the State Bank of Vietnam (SBV) has granted an interview to the SBV Website. Following is the full text of the interview:
Question (Q): How do you assess the movement of exchange rate in the recent days?
Answer (A): The upward trend of exchange rate in the past few days is mainly caused by the psychological factor before Fed’s meeting on USD interest rate increasing to 0.25%, and CNY depreciation. The supply and demand of foreign currencies of the domestic market have been positive developments. There were trade surplus of USD 500 million in October and about USD 260 million in November while the disbursement amount of FDI implementation increased by over 17% as compared to the same period. The remittance continues to flow into Vietnam.
Q: Could you explain the impacts of Fed’s decision on increasing USD interest rate to 0.25% on Vietnam’s market?
A: According to many specialists and the SBV, the Fed’s decision on increasing USD interest rate might put an insignificant impact on Vietnam’s market because of two reasons as follows:
Firstly, FPI into Vietnam (as short- term capital) accounts for a small proportion out of the total liabilities of Vietnam. Therefore, the Fed rate increase will insignificantly impact on capital flow movement.
Secondly, the Fed rate increasing has been seen in the anticipation of USD raise since the beginning of the year.
On the basis of the above assessment, it can be said that the developments of exchange rate in the recent days are mainly due to the psychological factor followed by the increase of foreign currency deposits of the entities and the individuals with credit institutions.
Q: Could you talk about the orientations of exchange rate management of the SBV in the coming time?
A: In general orientation, the SBV continues stabilizing the forex market and exchange rate. It is the fact that from the beginning of the year until now, the SBV has been conducting several measures to stabilize the market.
In the coming time, the SBV will continue utilizing consistent measures, including measures on interest rates, deposit and other relevant management mechanism.
Q: Thank you!
LH