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Vietnam’s weekly financial - monetary update (Week 19 – 2021)

Vietnam’s weekly financial - monetary update (Week 19 – 2021)

Wednesday 26, 05 2021

Vietnam’s macro-economic overview

In April 2021, Vietnam continued to see a clear economic recovery in the context of well-controlled Covid-19 epidemic. In particular, the index of industrial production (IIP) in April 2021 increased by 1.1% over the previous month and by 24.1% over the same period last year. Generally, in the first 4 months of 2021, the IIP increased by 10% over the same period last year, of which the manufacturing increased by 12.7%, higher than the 9.7% increase in the first 4 months of 2020. In addition, the Purchasing Managers' Index (PMI) calculated by IHS Markit reached 54.7 points in April 2021, higher than in March.

macro-economic

The total retail sales of consumer goods and services in April 2021 is estimated at 409.4 thousand billion VND, up 2.3% over the previous month and 30.9% over the same period in 2020. Generally for the first 4 months of 2021, the total retail sales of consumer goods and services reached 1,695.6 trillion VND, up 10% over the same period last year.

The number of newly established enterprises and the amount of registered capital both increased in April 2021. Generally, in the first 4 months of the year, the number of newly established enterprises increased by 17.5% over the same period last year, marking the highest increase in the same period from 2017 to 2021 while the total registered capital increased by 41%.

Meanwhile, domestic inflation continued to be well controlled with CPI in April 2021 falling 0.04% MoM because food prices decreased due to abundant supplies. The average CPI in the first 4 months of 2021 increased only 0.89% - the lowest increase since 2016.

Despite the positive results in the first four months of 2021, in general, Vietnam’s economy is facing great risks in the context of a new outbreak of Covid-19 epidemic which has spread to many parts of the country.

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 market. At VCB, compared to the previous week, the exchange rate of USD / VND increased by 10 VND / USD to 22,940 VND / USD (purchased) and 23,150 VND / USD (sold), respectively. Compared to the beginning of 2021, the USD / VND has decreased by 40 VND / USD.  

On the unofficial market, the USD / VND exchange decreased by 50 VND / USD on both buying and selling sides, to 23,580 VND / USD and 23,630VND / USD, respectively.

Exchange rate

At the State Bank of Vietnam, the USD / VND exchange rate was stable at 23,125 VND / USD, which is 748 VND / USD lower than the ceiling price. Compared to the previous week, the USD exchange rate on the selling side increased by 18 VND / USD to 23,823 VND / USD and was 50 VND / USD lower than the ceiling price.

Meanwhile, the central exchanged rate announced by the State Bank applicable to May 6, 2021 was 23,178 VND / USD, up 18 VND / USD compared to the rate announced the previous week.

It is forecasted that the USD / VND exchange rate will remain stable or only fluctuate in a narrow range. Foreign exchange reserves of Vietnam will increase by about 4.2 months of imports by the end of 2020.

Gold price

The increase in world gold prices was mainly due to inflation concerns and the negative developments of the Covid-19 pandemic.

The Federal Reserve System (FED) of the US wants to maintain loose monetary policy for the foreseeable future, but the rapid recovery of the economy has sparked speculation about the withdrawal of support measures earlier than expected. Higher interest rate will  increase the opportunity cost of owning a non-profitable asset like gold.

That investors tend to pour their capital into the USD, which helps this currency rise again, is another factor making people worry about the risks in gold investment channels, putting pressure on the price of gold.

In addition, when the US Government bond interest rate skyrocketed from 1.57% / year earlier to nearly 1.6% / year, many investors have poured capital into the bond channel and this has narrowed the cash flow into the gold market.

Gold price

At the end of the week, spot gold price was 1,785.48 USD / oz. Gold futures price in June 2021 on Comex New York was 1,785.4 USD / oz. On the Kitco trading exchange, gold prices were 1,786 – 1,787 USD / oz.

World gold price was about 50.4 million VND / tael, which is 5.3 million VND lower than the domestic gold price.

The domestic gold prices saw an increase in the past week. In Hanoi, SJC gold price increased by 130 thousand VND / tael on the selling and buying sides, to 55.43 – 55.8 million VND / tael.

Source: Ministry of Industry and Trade

Compiled by VietnamCredit

Categories
Banking & Finance

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