The State Bank (SBV) reported that despite the international market (the Chinese yuan has sharply depreciated and the US-China trade war continues), the domestic forex market is stable, liquidity is strong, and all legal demands for foreign currencies can be satisfied.

SBV reported that forex reserves have hit $73 billion, which means that it had bought $6.6 billion for reserves since July. Analysts commented that SBV could buy dollars at reasonable prices, noting that during that period, the dollar depreciated against the dong.

According to securities companies, Vietnam’s enjoyed a high trade surplus in the first eight months of the year. The disbursed foreign investment capital during that time was also high, $12 billion, an increase of 6.3 percent over the same period last year.

Vietnam also witnessed 5,235 deals of capital contribution by foreign investors with total value of $9.51 billion, an increase of 80 percent compared with the same period last year.

The international investment flow tends to head for Vietnam as a result of the US-China trade war. The CPTTP took effect on January 14, 2019 and the EU-Vietnam FTA (EVFTA) was signed recently. All these factors explain the strong flow of capital to Vietnam to take full advantage of preferences offered to Vietnam as a member of the agreements.

The State Bank reported that despite the international market (the Chinese yuan has sharply depreciated and the US-China trade war continues), the domestic forex market is stable, liquidity is strong, and all legal demands for foreign currencies can be satisfied.

As for foreign portfolio investment, the equitization and state’s divestment continue attracting foreign investors, helping Vietnam collect a big amount of foreign currencies.

Earlier this year, Vietcombank sold its shares to foreign investors, collecting VND6.2 trillion ($270 million). Vingroup has recently successfully sold 15 percent of shares to SK Group from South Korea in deal worth $1 billion.

Meanwhile, the deal of BIDV selling 15 percent of shares to South Korean Keb Hana Bank with the value of $885 million has wrapped up.

Leaders of the State Bank told the local press that the watchdog agency has been following a flexible policy in managing the foreign exchange rate. With record high forex reserves, the watchdog agency has bigger resources to manage the forex market more effectively, and can intervene in the market when necessary to control foreign exchange.

The official exchange rate announced by the State Bank has increased by 1.3 percent so far this year, below the targeted level of 2 percent. In the unofficial market, the dong has appreciated against the dollar over the last two months.

However, analysts said the pressure on the exchange rate tends to increase towards the end of the year. Therefore, it is necessary to prepare now.

Thanh Lich 

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