VietNamNet Bridge - The exchange market has been more peaceful than ever in the last 10 months with excess liquidity, stable exchange rates and record-high foreign exchange reserves of $40 billion, the highest level so far.



No devaluation and no considerable price fluctuation have been reported in the last 10 months. The current situation is different from this time last year, when the dong/dollar exchange rate was under pressure following the Chinese government's devaluing the Chinese yuan.

Anh Mai, the owner of a gold shop on Bui Thi Xuan street in Hanoi, said that investors should not expect fat profits this year because there was no ‘strong wave’ in the market.

“The gold price increased for a very short time in July as a result of Brexit. The dollar price increased modestly by tens of dong per dollar to VND22,380 per dollar."

When asked if they should continue holding dollars, Mai said it would be better to sell dollars for Vietnam dong to deposit at banks.

No devaluation and no considerable price fluctuation have been reported in the last 10 months. The current situation is different from this time last year, when the dong/dollar exchange rate was under pressure following the Chinese government's devaluing the Chinese yuan.

“Why hoard dollar if the dollar deposit interest rate is at zero percent and the dollar price stays unchanged?” Mai said.

The dollar has increased very slightly in the last two weeks compared with the end of September with the official exchange rate hitting VND22,011 per dollar, up by VND62 per dollar, while commercial banks quote the dollar at VND22,340 per dollar.

In its report about the debt market, MBS Securities said that this was the effect of US FED’s decision on keeping the prime interest rate unchanged after its meeting on September 22.

With the basic inflation rate below 2 percent in the last nine months, there will not be much pressure from total demand. 

The short-term factors that may affect the dong/dollar exchange rate include the expectation about the FED’s decision to raise the interest rate and the downward trend of gold prices.

Commenting about the foreign exchange market, analysts say 2016 is a ‘special year’. The new way of exchange rate regulation has eased pressure on the exchange rate in the context of the low interest rate of the dong. 

The volume of foreign currencies the State Bank bought by September 30 had reached $10.7 billion, while national foreign exchange reserves had reached a record high of $40 billion.

Analysts also say that the stable exchange rate brings big benefits to the national economy. As the exchange rate is not fluctuating, investors are no longer interested in speculation.

Meanwhile, a State Bank official emphasized that the stable exchange rate has helped calm foreign investors as they don’t have to worry about exchange rate risks.

Kim Chi