The (USD-VND) exchange rate has been appreciated in the recent days. In order to update information on this issue, Mr. Pham Thanh Ha, Director General of the Monetary Policy Department of the State Bank of Vietnam (SBV), has granted the press an interview about the recent exchange rate developments. Below is the full text of the interview.
Question (Q): Could you please make a general assessment of the exchange rate developments over the recent time?
Answer (A): From the beginning of 2020 to the time before Tet holiday, in light of the abundant supply of foreign currencies and favorable factors in the international market, the exchange rates were relatively stable; the SBV continued to purchase a large amount of foreign currencies to increase the state foreign exchange reserves. After Tet holiday, although the forex market was under certain pressures from the Covid-19 impacts, the exchange rates just fluctuated insignificantly; there were some days when the exchange rates were down close to the buying rate of the SBV, and credit institutions continued to sell foreign currencies to the SBV. However, since the beginning of the previous week, the exchange rates have been on an upward trend when the changes in the international financial market have been remarkable. Despite that, the liquidity in the market is basically ensured, the legitimate demands for foreign currencies have been met fully and promptly.
Q: Could you point out the reasons for the increase of the exchange rates recently?
A: Due to the adverse developments of the Covid-19 pandemic, many currencies have been going through big changes; the currencies in many big trade partners of Vietnam have also been depreciated. Although many central banks have continuously issued policies to support the market liquidity, those policies need a latency to make effective interventions with the markets. On that trend, the USD/VND exchange rate has appreciated over the recent days due to the fluctuations in the international market and the Covid-19 developments affecting the citizens’ psychology. However, through the SBV’s monitoring, the balance between foreign currency supplies and demands has not experienced any big changes. The trade balance of goods reached a surplus of USD 1.82 billion in the first 2 months of 2020, and continued to have a surplus of USD 880 million in March 2020. The forex status has been maintained at a positive level, the legitimate demands for purchasing foreign currencies have been met promptly and fully.
Q: What are the SBV’s management orientations in the coming time?
A: Implementing the directions of the Government, the SBV, the relevant ministries and agencies have strictly conducted measures to remove the difficulties in production and business operations, supporting the economy amid the adverse developments of the Covid-19 pandemic. In the coming time, the SBV will continue to monitor closely the developments in the domestic and international markets, work out possible scenarios that may occur, regulate the key rate of VND versus USD in a flexible manner, as well as continue to use consistently the measures and the monetary policy instruments to stabilize the forex market. In 2019 and in the first months of 2020, the SBV continuously purchased a large amount of foreign currencies to increase the state foreign exchange reserves, contributing to strengthening the national financial and monetary security, and enhancing the capabilities of intervention when necessary. With such available abundant supplies of foreign currencies, if necessary, the SBV is willing to sell foreign currencies at lower prices than the current quoted exchange rates to stabilize the market, contributing to the macroeconomic stability.
Le Hang