VietNamNet Bridge - The national foreign exchange reserves have reached $40 billion, the highest level so far, a source from the State Bank of Vietnam (SBV) said March 24.

The official who released the information said the record high foreign exchange reserves are the results of macroeconomic policies, especially the monetary policies.

Vietnam’s payment balance began seeing as surplus in 2012, which allowed the central bank to buy a large amount of foreign currencies. 

“The foreign exchange reserves had reached over $35 billion by the end of 2015, and if counting the gold and foreign currencies the State Treasury and credit institutions deposit at SBV, the figure would be about $40 billion,” he said.

In the past, the foreign exchange reserves witnessed sharp decrease due to the trade deficit and the decrease in people’s confidence in the Vietnam dong which. The foreign exchange reserves had dropped to $9 billion by 2010.

However, the situation has improved. At the meeting between the Prime Minister and businesses in late April 2014, SBV’s Governor Nguyen Van Binh stated that the foreign exchange reserves by April 2014 had reached $35 billion.

The record high foreign exchange reserves are the results of macroeconomic policies, especially the monetary policies.

On July 28, 2015, Binh told Thoi Bao Kinh Te Sai Gon that the foreign exchange reserves were $37 billion.

Former Governor of SBV Cao Sy Kiem commented that the foreign exchange reserves have increased thanks to a series of solutions which aim to stabilize the macro economy, enhance the Vietnam dong value, ease dollarization and gold use in the national economy.

With the solutions, the foreign currency liquidity in the banking system has been step by step improved, while the confidence on Vietnam dong value has been consolidated. Credit institutions now can buy big volumes of foreign currencies from customers and sell to SBV.

The high ranking official emphasized that while the bank has bought big volumes of foreign currencies to increase the reserves, it has also taken necessary measures to avoid pressure on inflation.

The situation is different from 2008, when the increased foreign exchange reserves was cited as a reason which pushed the inflation rate up due to the money supply increase.

Also according to the official, the increased foreign exchange reserves have helped improve Vietnam’s position in the international market, which explains the sharp government bond interest rate reduction from 7.2 percent to 4.8 percent in 2015. This allowed the government to ease the cost of foreign debts.

On March 15-25, 2016, the central exchange rate announced by the State Bank showed the dong depreciated by VND7 per dollar, while it depreciated by VND15 per dollar on the interbank market. The exchange rate is hovering around VND22,300-22,350 per dollar.

NCDT