Over the weekend, USD price at commercial banks was maintained at a low level, buying VND 23,110 / USD, selling VND 23,230 / USD. Comparing to the beginning of the year, the USD price dropped by about 25 dong / USD.
Notably, the trend of the downward exchange rate has been maintained by commercial banks for many days. While the central rate has increased by only 1.45% compared to the beginning of the year and is being announced by the State Bank at 23,160 VND / USD.
This is quite a sudden development of the exchange rate at the end of the year compared with previous years. At the beginning of the year, the exchange rate is expected to fluctuate by no more than 2% -3% compared to the previous year if there were no unexpected shocks.
Explaining this "strange" phenomenon, analysts of the Institute of Training and Research of the Bank for Investment and Development of Vietnam (BIDV) said that thanks to the relatively positive macroeconomic of Vietnam have contributed to the exchange rate stabilization. Specifically, the abundant supply of foreign currencies and the accumulated trade balance of 11 months had a record surplus of 9.1 billion USD; disbursement of foreign direct investment (FDI) was good, estimated at 17.62 billion USD, up 6.8% over the same period; Vietnam is in the top 10 countries in the world receiving remittances, estimated at 16.7 billion USD this year ... so there is no reason for the exchange rate to fluctuate in the last days of the year.
Nguyen Dinh Tung, General Director of Orient Commercial Joint Stock Bank, said the abundant supply of foreign currencies helped banks meet the demand for foreign currencies for customers. "It has never been easier for customers to buy foreign currencies because of the abundant supply. Vietnam has a good opportunity to attract foreign investment, record trade surplus, positive remittances ..." Mr. Nguyen Dinh Tung said and cited that in Ho Chi Minh City alone in the past 11 months, remittances flowing to the city through the system of credit institutions in the area reached US $ 4.3 billion, expected to reach 5.3 billion USD, up 9% compared to the previous year. This resource plays an important role in stabilizing the supply and demand for foreign currencies in the area.
He stated that the exchange rate is in a positive trend and if in the coming time, Vietnam's economy continues to be stable, the capital inflows into Vietnam will still be positive and will support the exchange rate well.
The monetary market report of SSI Research (SSI Securities Company) showed that the supply and demand of foreign currencies were stable, while the difference between VND and USD interest rates in the interbank market remained high (around 2.5. % / year) supported the VND to raise its value. The buying rate of commercial banks is now at the exchange rate of July 2018, the beginning of the US-China trade war and 0.32% lower than the end of last year.
"In the last month of the year, there are many factors intertwining the impact but it is very likely that the USD / VND exchange rate at the end of 2019 will be lower or equal to the end of 2018, marking a successful year of operation of the State Bank's exchange rate. "- SSI Research analyst group forecasted.
Many economic experts also positively evaluated the monetary management policy of the State Bank in 2019. Accordingly, the State Bank has used reasonable and flexible policies to stabilize exchange rates, curb inflation, promoting macroeconomic growth. The governing body has actively used a series of money market instruments such as lowering operating interest rates, lowering interest rates via T-bill channels, opening the market, lowering the USD buying rate in parallel with gradually increasing the center exchange rates to match the market movements.
Ngo Dang Khoa, national director of currency and capital markets at HSBC Vietnam, said the VND continued to be among the most stable currencies in the region, despite geopolitical uncertainty and domestic and foreign economic events. The pair of USD / VND almost remained stable throughout most months of 2019, even VND appreciated against the USD when the State Bank proactively lowered buying prices at the end of November. Since then, the State Bank has also purchased a large number of foreign currencies, increasing the foreign exchange reserves to a record high ever.
"In the context of the global market witnessed many fluctuations, especially the US-China trade war with many unpredictable developments, the Chinese yuan has depreciated, to the lowest level in 11 years. However, the VND remained stable. This trend is even more evident when China is one of the three largest trading partners of Vietnam" - Mr. Ngo Dang Khoa analyzed.
Regarding the exchange rate trend in 2020, many experts believe that there is a basis to expect the exchange rate to continue to be operated under a flexible mechanism. With the record high foreign exchange reserves, the State Bank will have enough tools and resources to manage the exchange rate in a stable direction, meeting the market supply and demand. However, there are challenges to watch and monitor, such as uncertainties as the global economy shows signs of slowing, trade wars and Brexit (the process of Britain leaving the EU) has not been completely resolved.
According to Ngo Dang Khoa, the recent fact that Vietnam has been placed on the watch list of US dollar exchange manipulation is also a worrying signal in the near future. The trend of the exchange rate continues to be unpredictable in the context of the geopolitical situation in the world constantly moving. Regulatory agencies should continue to operate the market in a flexible and proactive manner to avoid creating shocks on exchange rates and interest rates.
An expert from HSBC Vietnam recommends facing the unpredictable fluctuations of exchange rates, businesses, especially import-export enterprises or having foreign loans in foreign currencies, proactively using an exchange rate and interest rate protection tools ... to ensure proactive in cash flow planning and profit balance.
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