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Vietnam’s weekly financial - monetary update (Week 21 – 2021)

Vietnam’s weekly financial - monetary update (Week 21 – 2021)

Thursday 27, 05 2021

Vietnam’s macro-economic overview

Vietnam’s economy is under huge pressure because the Covid-19 epidemic has broken out again. Currently, the production and business activities of many enterprises are being negatively affected due to social distancing measures. In addition, in some areas where there are many infectious cases of COVID-19, businesses have to stop operation temporarily. Service-related industries such as aviation, transportation and tourism are those suffering the most.

However, the global economy in general and Vietnam's economy in particular are still witnessing a strong recovery, leading to an increasing demand for goods and services. Besides, monetary easing policies through low interest rates and a series of economic stimulus packages by central banks of other countries have also contributed significantly to boosting global commodity prices. Along with the roadmap to increase prices of a number of goods and services managed by the State, the above factors will make an important contribution to increasing inflationary pressure in the coming time, making it difficult to control inflation and stabilize the macro-economy.

macro-economic

In April 2021, deposit and lending interest rates of most commercial banks were maintained at low levels. Meanwhile, credit and deposit both recorded rapid growth. According to the General Statistics Office, as of April 22, 2021, credit and deposite of the economy had increased by 3.61% and 2.32% respectively compared to the end of 2020. Despite the increase, deposit growth is still lower than credit growth, however, this figure is much higher than the growth rate of 0.54% at the end of March 2021.

In the short term, it is forecasted that the interest rate will be stable at a low level to support the economy. However, in the second half of 2021, with inflationary pressures increasing and credit accelerating more clearly following the recovery of the domestic economy, it is expected that interest rates, especially lending rates, will inch up.

Weekly financial - monetary situation and forecasts

Exchange rate

In the past week, the USD / VND exchange rate was stable on the official market but decreased on the unofficial market. At VCB, compared to the previous week, the exchange rate of USD / VND was stable at 22,910 VND / USD (purchased) and 23,150 VND / USD (sold). Compared to the beginning of 2021, the USD / VND has decreased by 50 VND / USD.  

On the unofficial market, the USD / VND exchange decreased by 20 VND / USD on the buying side and by 60 VND / USD on the selling side, to 23,200 VND / USD and 23,240VND / USD, respectively.

Exchange rate

At the State Bank of Vietnam, the USD / VND exchange rate was stable at 23,125 VND / USD, which is 724 VND / USD lower than the ceiling price. Compared to the previous week, the USD exchange rate on the selling side decreased by 14 VND / USD to 23,799 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 20, 2021 was 23,154 VND / USD, down 14 VND / USD compared to the rate announced the previous week.

Gold price

The world gold price increased due to the facts that the USD was depreciated, the stock market plummeted, and Bitcoin was sold in mass. In addition, gold investment funds massively bought in, causing many other investors to follow the trend. In 2 consecutive trading sessions (from May 17-18, 2021), investment funds bought a total of 21.8 tons of gold, of which SPDR Gold Shares, the world's largest investment fund, bought 15.3 tons of gold.

Bitcoin

Due to rising inflation in the US, many people reduced their USD holdings, causing this currency to continue to weaken on a large scale, stimulating investors to pour capital into precious metals, boosting gold prices.

Gold prices also rose after the European Central Bank (ECB) warned of major risks to financial stability in the Eurozone when the region gets over the pandemic with a significant debt burden and bubbles in the markets when bond yields rise. Fiscal and monetary stimulus measures can cause imbalances.

On the other hand, investors continued to sell off Bitcoin virtual currency, causing a decrease in the value of this coin from 45,000 USD to 43,500 USD/Bitcoin. Accordingly, they poured part of their capital into the gold market.

On top of that, concerns about the outbreak of the Covid-19 pandemic in some countries in Asia have prompted investors on Wall Street to sell stocks. The US stock market fell. The Dowjones fell 267 points, the S&P 500 fell 35 points and the Nasdaq dropped 75 points. Many people have directed their money into the commodity market, including gold.

At the end of the week, spot gold price was 1,866 USD / oz. Gold futures price in June 2021 on Comex New York was1,882 USD / oz, which is an increase of 54 USD / oz (2.9%).

Gold price

World gold price was about 53.4 million VND / tael, which is 2.9 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 280 thousand VND / tael on the buying and selling sides, to 55.98 – 56.35 million VND / tael.

Source: Ministry of Industry and Trade

Compiled by VietnamCredit

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Banking & Finance

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