Vietnam’s foreign exchange reserves have soared to a new high of US$40 billion thanks to the execution of some policy tools, especially monetary policy, said an official from the State Bank of Vietnam (SBV).

The official told the Daily on March 24 that the nation’s balance of payments has run a huge surplus since 2012. Therefore, the SBV has acquired a large amount of foreign currencies, pushing up the country’s forex reserves to a record high of US$35 billion in 2015.

If other items such as gold, deposits of the treasury and credit institutions at the central bank are included, the figure would be US$40 billion, the official said.

Earlier, Vietnam saw its forex reserves dwindling due to trade deficit and low confidence in the domestic currency. In 2010, the reserves fell to around US$9 billion.

At a meeting between the Prime Minister and businesses in April 2014, the SBV’s governor Nguyen Van Binh put the forex reserves at over US$35 billion. In July 2015, the figure edged up to US$37 billion, excluding gold.

According to former SBV governor Cao Sy Kiem, foreign reserves increased thanks to monetary and foreign exchange policies, which have contributed to macroeconomic stability, the appreciation of the Vietnam dong and the prevention of gold and greenback hoarding. Banks have net bought foreign currencies and then sold them to the central bank.

Though the central bank has bought a large amount of foreign currencies to improve forex reserves, it has at the same time taken measures to ease inflationary pressure. In 2008, rising forex reserves were among the causes of high inflation in the country.

The SBV official said the improvement of forex reserves has helped improve Vietnam’s position on global markets with foreign bond yields falling from 7.2% to 4.8% in 2015, sharply reducing the Government’s external loan costs.

In addition, investors will have more confidence in macro management in the country.