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Vietnam’s weekly financial - monetary update (Week 11 – 2021)

Vietnam’s weekly financial - monetary update (Week 11 – 2021)

Saturday 20, 03 2021

Vietnam’s macro-economic overview

Since the beginning of March 2021, the savings interest rates at some commercial banks have shown signs of rebound after many months of decline. Due to the facts that the Covid-19 epidemic was once again under control, Vietnamese people are going to be vaccinated and economic indicators have improved, the demand for credit is forecast to increase in the coming period. Besides, the interest rate policy is also under pressure after the inflation in February 2021 increased by 1.52% compared to the previous month - the highest increase of the price index in February in 8 recent years. However, in the context that the overall liquidity of the banking system is still relatively positive, this may not be the general trend of the market; and it is difficult for the deposit interest rate level of the entire commercial banking system to break through in the first 6 months of 2020.

Vietnam’s macro-economic overview

In the field of trade, due to the long Lunar New Year holiday, export and import activities in February 2021 decreased sharply compared to January 2021. However, in the first 2 months of 2021, Vietnam’s imports and exports still achieved high growth. According to the General Department of Customs, export turnover in the past 2 months reached 48.74 billion USD, up 23.7% over the same period in 2020 while import turnover reached 47.1 billion USD, increasing by 25.5% over the same period in 2020. With this result, the trade balance in the first 2 months of 2021 saw a surplus of 1.64 billion USD. In 2021, the Ministry of Industry and Trade sets a target of a total export turnover of about 571 billion USD, equivalent to an increase of about 5% compared to 2020 and the trade balance continues to maintain a trade surplus.

Weekly financial - monetary situation and forecasts

Exchange rate

In the past week, the USD / VND exchange rate increased on the official market but decreased on the unofficial markets. At VCB, compared to the previous week, the exchange rate of USD / VND increased by 30 VND / USD on both buying and selling sides, to 22,930 VND / USD (buying side) and 23,140 VND / USD (selling side). Compared to the beginning of 2021, the USD / VND has decreased by 50 VND / USD.  

On the unofficial market, the USD / VND exchange rate decreased by 20 VND / USD on the buying and increased by 10 VND / USD on the selling side, to 23,770 VND / USD and 23,830 VND / USD, respectively.

Exchange rate

At the State Bank of Vietnam, the USD / VND exchange rate was stable at 23,125 VND / USD, which is 775 VND / USD lower than the ceiling price. Compared to the previous week, the USD exchange rate on the selling side increased by 53 VND / USD to 23,850 VND / USD and was 50 VND / USD lower than the ceiling price.

Meanwhile, the central exchanged rate announced by the State Bank applicable to March 11, 2021 was 23,204 VND / USD, up 52 VND / USD compared to the rate announced the previous week.

Currently, the supply of foreign currency in Vietnam is still very favorable. In the short term, exchange rate may fluctuate due to the impact of the dollar's movements in the international market. In the long term, when the US Federal Reserve (FED) has not changed the current rate of monetary loosening, the USD will still be under pressure to decrease. It is forecasted that the USD / VND exchange rate is likely to decline slightly in 2021.

Gold price

World gold prices have recovered but there has been no certainty for this recovery.

The stimulus package worth 1.9 trillion USD of the United States is likely to cause very high inflation. At that time, gold will be bought in mass. However, the Federal Reserve (FED) will soon tighten the super-loosening monetary policy, which will put pressure on the gold market. Besides, stability of US bond yields also makes keeping gold less attractive because investors tend to pour money into assets that generate stable income in the form of interest or dividends.

In addition, the largest gold trading fund in the world, SPDR Gold Trust, has reduced its holdings to its lowest level in 10 months. In recent sessions, this fund has sold a large amount of gold to the market.

Gold price

At the end of the week, spot gold price was 1, 727 USD / oz. Gold futures price in April 2021 on Comex New York was1,717 USD / oz. On the Kitco trading exchange, spot gold prices were at 1,730.6 – 1,731.6 USD / oz.

World gold price was about 48.7 million VND / tael, which is 6.7 million VND lower than the domestic gold price.

The domestic gold price continued to decrease. In Hanoi, SJC gold price decreased by 320 thousand VND / tael (purchased) and by 330 thousand VND / tael (sold) to 55.33 – 55.77 million VND / tael.

Source: Ministry of Industry and Trade

Compiled by VietnamCredit

Categories
Banking & Finance

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