Question (Q): Could you please make a general assessment of the exchange rates and the forex market in the first six months of the year?
Answer (A): The exchange rates and the forex market in the first five months were relatively stable thanks to the favorable factors in the domestic and international markets, such as surplus trade balance, the FDI disbursement at a high level, a large amount of FII and a stable US Dollar index. In the context of abundant supplies of foreign currencies, the SBV has 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.
From the end of May to now, there were some days when the exchange rates rose remarkably, however, the liquidity in the market was still ensured, and the forex status was maintained at a positive level, the legitimate demands for purchasing foreign currencies were met promptly and fully.
Q: Could you point out the reasons for the increase of the exchange rates recently?
A: From June 18 to now, the exchange rates have been on an upward trend. By July 2, it was 1.2% higher than that of the end of 2017. The exchange rates have risen in the recent days due to the following reasons: First, the USD interest rate in the inter-bank market was up in line with the upward trend of the interest rate in the international market, while the VND interest rates in the inter-bank market were still at a low level. This resulted in the negative level of the difference between the USD and VND interest rates. Second, several factors in the domestic and international markets affected the market psychology, such as sharp decreases in the stock market indexes in some sessions and the appreciation of the USD in the world market.
Q: What are the SBV’s management orientations in the coming time?
A: In the coming time, the SBV will continue to monitor closely the developments in the domestic and international markets, pay due attention to the roadmap and the effects of the possible increase in the interest rate by the Fed, the trade relations between the US and China, the decisions made by the European Central Bank and the Bank of Japan, as well as the domestic supplies and demands of foreign currencies to manage the central exchange rates in a flexible manner. The SBV will continue to conduct synchronously these measures and other monetary policies, be ready to sell foreign currencies to intervene in the market. 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 macro-economic stability.
Le Hang