Remittances steady as lenders apply fresh transfer services

Remittance flows from Vietnamese expatriates working abroad are predicted to remain resilient throughout the rest of the year, with the country’s central bank keeping its policy steady for now.

Remittances steady as lenders apply fresh transfer services
Illustrative image. – Photo tapchitaichinh.vn

According to the World Bank, remittances inflow to Vietnam in 2021 as a whole will remain persistent compared to 2020 despite the ongoing pandemic.

Last year, the number of overseas remittances to Vietnam in 2020 was $17.2 billion, making Vietnam one of the top 10 beneficiaries among low and middle-income countries.

Nguyen Hoang Minh, deputy director of the State Bank of Vietnam Branch in Ho Chi Minh City, said in the first seven months of this year, remittances pouring into the city reached $3.7 billion, up more than 19 per cent over the same period last year.

“Specifically, remittances mainly focused on production and business. This not only contributes to supporting the city’s economic development but also helps stabilise the foreign currency reserves across the country in general,” Minh said. “Undoubtedly, remittance inflow plays a crucial lifeline to the vulnerable.”

Remittances to the city are expected to at least double over the second half of the year and possibly surpass the contribution rate of more than one-third of the country’s total remittances in the year.

Back in May, the World Bank upgraded its forecast for remittances to low- and middle-income countries for 2021, predicting flows of $553 billion over the course of the year, reflecting a growth rate of 2.6 per cent. The strong flow of remittances underscores their importance to many emerging market economies.

Le Hoang Chau, chairman of the Ho Chi Minh City Real Estate Association, stated the high inflows of cash that have caused real estate prices to reach record highs also includes remittances.

Agribank’s Remittance and Payment Service Centre also expects remittance inflows to Vietnam to remain stable. A large share of Agribank customers are workers who are now abroad in markets including Japan, South Korea, Taiwan, and the US.

The World Bank said that with remittances expected to increase by another 2.2 per cent to $565 billion in 2022, there are concerted efforts underway to reduce transfer costs.

A handful of banking and payment services have jumped onto the remittance transferring bandwagon. Last week, Visa partnered up with Sacombank to deploy an inbound remittance transfer service through Visa Direct. Vietnamese people who are also Sacombank Visa debit cardholders can use the service to transfer money to any other Visa card issued in 44 countries and territories. It is applicable to the nine most-traded foreign currencies worldwide.

 

Sacombank is the first local lender to implement this form of money transfer in the Vietnamese market based on Visa’s secure technical platform, and meets the criteria of a fast and convenient service.

The government is now gradually reopening the economy, so domestic brokerage SSI expects the trade balance to improve at the end of the year and remittance flows usually increase sharply as Lunar New Year approaches. Supply and demand of foreign currency in the market will be relatively balanced and help the USD/VND exchange rate maintain a stable state, SSI explained.

On the other hand, despite the disappointing performance in Q3 2021 and with chances of a recovery in Q4 2021, the State Bank of Vietnam (SBV) is likely to keep its policy steady and leave the refinancing rate at 4 per cent and rediscounting rate at 2.5 per cent, both record lows.

According to UOB Vietnam, one key consideration for the SBV is the US Federal Reserve’s policy change ahead, which could have implications on emerging markets like Vietnam as capital flows react to the policy shift.

“While we see low risks of disruptive or disorderly capital outflows from emerging markets, this is likely to be one key area that central banks watch carefully,” UOB Vietnam noted last week. “Our scenario is for the Fed to begin the tapering of its bond purchases before end-2021 and complete the process by mid-2022, thereafter interest rate hike to start by end-2022.”

For the VND, the unit strengthened modestly against the USD in Q3. This came as Vietnam reached an agreement with the US Treasury in July to refrain from deliberately weakening the VND to gain an export advantage.

The outlier strength of the VND also comes in a period where most of its Asian peers are retreating against the USD as the Fed’s upcoming normalisation plans spurred a recovery in the USD.

More importantly, UOB Vietnam said, a strong VND is also increasingly at odds with the uncertain and weak economic outlook inflicted by the virus outbreak. It predicted strong support at 22,700 in the USD/VND rate, where further sustained gains of the VND are unlikely. Overall, the bank reiterates an upward trajectory in the USD/VND and updated its forecasts to VND22,900 in Q4 of 2021, rising up to VND23,200 by the third quarter of 2022.

Source: VIR

Vietnam among top 10 remittance recipients in 2020 with US$17.2 billion

Vietnam among top 10 remittance recipients in 2020 with US$17.2 billion

This was a fourth consecutive year that Vietnam remains in the top 10 in terms of remittance.

 
 

Other News

.
Trading value at stock market reaches record high
Trading value at stock market reaches record high
FEATUREicon  22/11/2021 

Cash keeps flowing into the stock market, including during trading sessions when the VN Index falls.

Hard limit for credit institutions buying corporate bonds
Hard limit for credit institutions buying corporate bonds
BUSINESSicon  22/11/2021 

Credit institutions with a bad debt ratio of more than 3 per cent are forbidden to buy corporate bonds, according to the latest announcement from the SBV.

Stock market to be turned into main medium and long-term capital channel
Stock market to be turned into main medium and long-term capital channel
BUSINESSicon  22/11/2021 

After 25 years of development, the Vietnamese stock market is playing a more important role in attracting capital, supporting the commercial banking system. 

Vietnam-Australia investment, trade promotion centre inaugurated
Vietnam-Australia investment, trade promotion centre inaugurated
BUSINESSicon  22/11/2021 

Vietnamese Ambassador to Australia Nguyen Tat Thanh attended a ceremony to inaugurate the Vietnam-Australia Trade and Investment Promotion Centre on November 20.

EU enterprises in Vietnam optimistic again
EU enterprises in Vietnam optimistic again
BUSINESSicon  21/11/2021 

The leadership of European Union enterprises in Vietnam has become more optimistic about Vietnam’s business environment after the social distancing has ended, and commerce and investment have begun the “new normal.”

Authorities, enterprises collaborate to respond to trade remedy lawsuits
Authorities, enterprises collaborate to respond to trade remedy lawsuits
BUSINESSicon  21/11/2021 

Vietnam is currently facing 208 trade remedy lawsuits, and this figure is expected to increase sharply in the coming time, causing the market share of Vietnamese goods to be at risk of shrinking in many export markets.

Vietnam and the ‘90% economy’
Vietnam and the ‘90% economy’
FEATUREicon  21/11/2021 

While Vietnam's economy is still struggling with difficulties, the world economy is recovering clearly, after a long period of paralysis due to the impact of the Covid-19 epidemic.

Black Friday 2021 launched in HCM City
Black Friday 2021 launched in HCM City
BUSINESSicon  20/11/2021 

The shopping festival Black Friday was kicked off on November 19 in Ho Chi Minh City.

Vietnam wins big tea contract with Malaysian partner
Vietnam wins big tea contract with Malaysian partner
BUSINESSicon  20/11/2021 

Nam Son Co., Ltd and Asia Tea of Vietnam will supply tea to Kong Wooi Fong Tea Merchants Sdn Bhd based in Malaysia under a contract worth up to 2 million USD.

Decrease in in seafood exports expected as a result of new Chinese policy
Decrease in in seafood exports expected as a result of new Chinese policy
BUSINESSicon  20/11/2021 

Vietnam’s seafood exports to China are likely to decrease sharply as Chinese customs are tightening control over imports.

Consumers more prudent with post-pandemic personal finances
Consumers more prudent with post-pandemic personal finances
BUSINESSicon  20/11/2021 

After giving birth to their second daughter, Thanh Van, a 39-year-old office worker in Hanoi, had to quit her job because she could not afford the cost of hiring a babysitter after a 30 per cent pay-cut due to the COVID-19 pandemic. 

Digital transformation to create new growth engine for Vietnam's agriculture
Digital transformation to create new growth engine for Vietnam's agriculture
BUSINESSicon  19/11/2021 

As digital transformation will help overcome most of the weaknesses faced by the local agriculture sector, it should be considered a breakthrough solution for sustainable growth and development in Vietnam.

Flower farmers do not dare grow large quantities for Tet amid Covid uncertainty
Flower farmers do not dare grow large quantities for Tet amid Covid uncertainty
BUSINESSicon  19/11/2021 

Many flower and bonsai farmers in HCM City and the Cuu Long (Mekong) Delta have reduced production for Tet (Lunar New Year) which falls early next year since they are worried the COVID-19 pandemic will affect demand.

VIETNAM BUSINESS NEWS NOVEMBER 20
VIETNAM BUSINESS NEWS NOVEMBER 20
BUSINESSicon  20/11/2021 

Binh Duong remains attractive to foreign investors

Vietnam may have new USD billionaires
Vietnam may have new USD billionaires
BUSINESSicon  19/11/2021 

If assets are calculated according to the value of the stock market, Vietnam will have more USD billionaires.

Vietnam among top 10 countries with largest installed solar power capacity
Vietnam among top 10 countries with largest installed solar power capacity
BUSINESSicon  19/11/2021 

Visual Capitalist has listed Vietnam among the world’s top 10 for largest installed solar power capacity.

Global energy crisis: another concern for Vietnam's economy
Global energy crisis: another concern for Vietnam's economy
FEATUREicon  19/11/2021 

Disrupted coal mining in Ordis in Inner Mongolia, the most important coal mining hub in the world, is posing huge risks that could stifle global growth.

Too many traceability apps confuse farm-produce buyers
Too many traceability apps confuse farm-produce buyers
FEATUREicon  19/11/2021 

The farm produce traceability system in Vietnam still doesn’t match GS1 standards (the most widely used system of standards in the world), and, as such, the existing traceability apps are just for internal use.

More businesses seek black credit as cash flow plummets
More businesses seek black credit as cash flow plummets
FEATUREicon  19/11/2021 

Seventy-one percent of businesses anticipate revenue decreases in 2021, higher than the 65 percent figure in 2020, according to a survey.

VIETNAM BUSINESS NEWS NOVEMBER 19
VIETNAM BUSINESS NEWS NOVEMBER 19
BUSINESSicon  19/11/2021 

Seafood stocks surge on business recovery

 
 
 
Leave your comment on an article

OR QUICK LOGIN