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Vietnam’s weekly financial - monetary situation (Week 42.5 – 2020)

Wednesday 21, 10 2020
Vietnam’s weekly financial - monetary situation (Week 42.5 – 2020)

Vietnam’s macro-economic overview

Thanks to the efforts of the Government and the State Bank of Vietnam in tax exemption and reduction, and reduction of lending interest rates to support business activities, the overall credit growth has recovered in recent months. According to SBV data, as of the end of September 2020, credit had increased by 6.09% compared to the end of 2019, higher than the 4.75% increase in August 2020, and significantly improved compared to the growth rate of only 2.8% in the first 6 months of 2020. Although the economy still faces many difficulties due to the impact of the Covid-19 epidemic, the above credit growth has positively contributed to the overall GDP growth.
Vietnam’s macro-economic overview
In the fourth quarter of 2020, credit growth is forecast to recover in the context that Covid-19 is still under good control; the State Bank of Vietnam has lowered the operating interest rate 3 times in a row from the beginning of 2020, making the deposit interest rates at joint stock commercial banks drop to the lowest levels in recent years; and business activities are gradually recovering, reflected through the positive developments of the Index of Industrial Production (IIP) and the Purchasing Managers' Index (PMI). In addition, credit growth is also supported by favorable conditions in the commercial sector brought about by the EVFTA. However, the credit demand of the economy cannot achieve the same growth rate as the pre-epidemic period, so it is forecasted that credit growth in 2020 will only reach 8-10% compared to 2019.

According to data from the General Department of Customs, the total import and export turnover in September 2020 reached 51.37 billion USD, an increase of 1.9% over the previous month. In particular, export value reached 27.16 billion USD and import value reached 24.2 billion USD. Generally, for the first 9 months of 2020, the total import and export turnover reached 388.62 billion USD, a 1.7% increase over the same period last year. 
import and export
In September 2020, Vietnam enjoyed a trade surplus of 2.96 billion USD. This is good regarding exchange rate stability and foreign exchange reserves. However, this development also brings risks to domestic enterprises when they are in danger of facing trade barriers coming from countries with large trade deficits with Vietnam. 

Weekly financial - monetary situation and forecasts

Exchange rate

In the past week, the USD / VND exchange rate decreased in the official market and the unofficial market. At VCB, compared to the previous week, the exchange rate of USD / VND decreased by 20 VND / USD (equivalent to a decrease of 0.09%) on both buying and selling sides to 23,060 VND / USD (buying side) and 23,270 VND / USD (selling side). Compared to the beginning of 2020, the USD / VND exchange rate on the selling side has increased by 40 VND / USD (equivalent to an increase of 0.17%).

In the unofficial market, the USD / VND exchange rate has decreased by 10 VND / USD on both sides to 23,190 VND / USD (buying side) and to 23,220 VND / USD (selling side).
Exchange rate
At the State Bank of Vietnam, the USD / VND exchange rate was stable at 23,175 VND / USD, which is 713 VND / USD lower than the ceiling price. Compared to the previous week, the USD exchange rate on the selling side decreased by 11 VND / USD to 23,838 VND / USD and is 50 VND / USD lower than the ceiling price.

Meanwhile, the central exchanged rate announced by the State Bank applicable to October 15, 2020 was 23,192 VND / USD, down 11 VND / USD (equivalent to a reduction of 0.05%) compared to the rate announced the previous week. Since early 2020, the central exchanged rate has been adjusted to increase by 19 VND / USD (equivalent to an increase of 0.08%). 

In the global market, the USD dropped against most of other major currencies last week. The US Dollar Index (DXY), which measures USD fluctuations against six major currencies (EUR, JPY, GBP, CAD, SEK, CHF) was at 93.42 points, down 0.2 points from the previous week. The USD fell against the GBP, JPY and CNY, whereby 1 GBP was equal to 1.29988 USD. The USD / JPY exchange rate decreased 0.64% as 1 USD was equal to 105,315 JPY; USD / CNY exchange rate decreased by 1.01%, 1 USD 1 equal to 6.72251 CNY. In contrast, the US dollar increased against the EUR, whereby 1 EUR was equal to USD 1.17426. 

It is forecasted that in the short term, USD will rebound. The stimulus package to support the US economy has not been passed and the obstacles in the development of Covid-19 therapeutic vaccine have made investors return to safe assets like USD.

Gold price

The world gold price increased due to the falling USD along with the uncertainty surrounding the US presidential election. The doubts about the new economic bailout package for American people that can hardly be approved before the end of this year are the factors driving the gold price.
The increase in gold price was also because the US Department of Labor has just informed that the producer price index (PPI) increased by 0.4% in September 2020, exceeding the forecast and higher than the 0.3% increase in August, 2020. 
Gold price
At the end of the week, spot gold price was 1,893 USD / oz, which was an increase of 7 USD / oz (equivalent to an increase of 0.4%) compared to last week. Gold futures price in December 2020 on Comex New York was 1,900 USD / oz, up 13 USD / oz (equivalent to an increase of 0.7%) compared to the previous week. On the Kitco trading exchange, spot gold prices were at 1,901.90 - 1,902.90 USD / oz, up 15.1 USD / oz (equivalent to an increase of 0.8%) compared to the previous week.

World gold price is about 2.1 million VND / tael lower than the domestic gold price.
Domestically, the price of gold has increased. Specifically, in Hanoi, SJC gold bought in and sold out price was 55.80 and 56.32 million dong / tael, respectively.
Source: Ministry of Industry and Trade
Compiled by VietnamCredit

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