The State Bank of Vietnam raised the inter-bank average exchange rate between the VND and USD by 1 percent early on May 7, from 21,458VND to 21,673VND per one USD.

Banks may set their rate within a range of +/- 1 percent of the SBV-set inter-bank average rate.

This is the second time this year the SBV has adjusted the inter-bank rate. The first time was on January 7, also with an increase of 1 percent.

The SBV said the adjustment is made to counter negative impacts from the international market in line with its policy set for this year, which aims to keep fluctuation in the exchange rate at not more than 2 percent.

The bank added that the rising exchange rate over recent days was due to psychological reasons and market expectations, while was still within the band set by the central bank.

Looking ahead, the SBV will continue to apply synchronous policy tools and measures to keep the exchange rate and market stable on the new price level. It will closely monitor the international and domestic markets as well as macroeconomic and monetary forecasts in order to make timely response.

Exchange rate adjustment necessary : experts

Economic experts agreed with the State Bank of Vietnam (SBV)’s adjustment to the exchange rate between Vietnamese dong and the United States dollar, calling it a necessity.

On May 7, the SBV increased the exchange rate between Vietnamese dong and the US dollar up one percent from 21,458 to 21,673.

A representative of the SBV explained the increasing trend in the exchange rate over the last few days has been mainly driven by psychological factors and market expectations.

According to banking and financial expert Nguyen Tri Hieu, the SBV’s adjustment was killing two birds with one stone: reducing risks for management agencies and increasing currency reserves.

It also helps stabilise the market and mitigate psychological behaviours, he said.

Hieu said the adjustment will inevitably have some impacts on the macro-economic market, such as increasing imported goods, affecting interest rates and driving inflation up.

According to a representative from the HSBC bank, the exchange rate change is an active move to narrow the trade deficit and control a slight depression in Vietnam’s balance of payments.

VNA