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Vietnam’s weekly financial - monetary update (Week 25 – 2021)

Vietnam’s weekly financial - monetary update (Week 25 – 2021)

Thursday 24, 06 2021

Vietnam’s macro-economic overview

Despite the difficulties caused by the Covid-19 epidemic, Vietnam’s credit growth has improved significantly compared to the same period last year. In the first 5 months of 2021, credit growth of the banking industry reached 4.67%, which is 1% higher than the growth announced by the State Bank on April 16. Although credit has recovered, it is likely that it may not experience more dramatic growth in the context that the State Bank of Vietnam has imposed credit limits for most banks at a lower level compared to the same period last year and the Covid-19 epidemic is still complicated.

Credit Growth

In order for credit to grow effectively and to limit bad debts, it is necessary to boost demand because the demand for capital has increased yet there are still many businesses in the fields of tourism, hotels, and airlines temporarily are still in the state of “hibernation”. Therefore, when offering loans, banks must control the payment abilities of customers to achieve the target of credit growth while maintaining asset and credit quality. In the context that the Covid-19 epidemic is gradually being controlled and the implementation of vaccination is being accelerated, it is expected that the economy will recover more strongly in the following months, leading to an acceleration of credit. It is forecasted that credit in 2021 can reach 12%, ensuring the credit growth target set by the banking industry at the beginning of 2021.

Weekly financial - monetary situation and forecasts

Exchange rate

In the past week, the USD / VND exchange rate decreased on both the official and unofficial markets. At VCB, compared to the previous week, the exchange rate of USD / VND decreased by 10 VND / USD, to 22,820 VND / USD (purchased) and 23,050 VND / USD (sold). Compared to the beginning of 2021, the USD / VND has decreased by 140 VND / USD. 

On the unofficial market, the USD / VND exchange decreased by 110 VND / USD on the buying side and by 130 VND / USD on the selling side, to 23,020 VND / USD and 23,050 VND / USD, respectively.

Exchange Rate

At the State Bank of Vietnam, the USD / VND exchange rate was stable at 22,975 VND / USD, which is 832 VND / USD lower than the ceiling price. Compared to the previous week, the USD exchange rate on the selling side increased by 10 VND / USD to 23,757 VND / USD and was 50 VND / USD lower than the ceiling price.

Meanwhile, the central exchanged rate announced by the State Bank applicable to June 17, 2021 was 23,114 VND / USD, down 10 VND / USD compared to the rate announced the previous week.

The value of the US dollar is still at a low level in the international market, so the domestic exchange rate will remain stable in the short term.

Gold price

The world gold price fell to a 4-month low. The USD dollar rose sharply in the context of investors betting on the possibility that the US Federal Reserve (Fed) will have to tighten quantitative easing (QE) policy sooner than expected.

The latest data showed that US retail sales fell more sharply than expected in May 2021, while producer prices increased by 6.6% year-on-year. This is the strongest increase since November of 2020. The recent strong increase in the US consumer price index has raised concerns about rising inflation.

The demand for gold is also quite low and the downtrend will continue in the short term.

In the long term, gold is still the best choice to fight inflation. The Fed will have to address inflation and considering reducing asset purchases as the labor market recovers sharply and commodity prices hits a 13-year high.

Gold price

At the end of the week, spot gold price was 1,819 USD / oz. Gold futures price in June 2021 on Comex New York was1,857 USD / oz, while on Kito it was from 1,818 to 1, 819 USD/oz.

World gold price was about 52.6 million VND / tael, which is 4.7 million VND lower than the domestic gold price.

The domestic gold prices has been stable. In Hanoi, SJC gold price was stable at 56.65 – 57.27 VND / tael.

Commodities and services

Vietnam’s rice industry

According to statistics of the General Department of Customs, in May 2021, Vietnam's rice exports reached 627 thousand tons, which is worth 339.05 million USD, a decrease of 34% in volume and 30.9% in value compared to the same period last year.

Generally, in the first 5 months of 2021, Vietnam's rice exports reached 2.6 million tons, equivalent to an export value of 1.4 billion USD, down 15.4% in volume and 5.3% in value over the same period in 2020. Rice export price reached an average of 543 USD/ton, up 11.9% over the same period in 2020.

In May 2021, Vietnam's rice exports to most major markets decreased compared to the same period in 2020, while exports to Bangladesh, Mozambique, Australia and Belgium increased sharply. Generally, in the first 5 months of 2021, rice exports decreased mainly due to a decrease in exports to the Philippines, Malaysia, UAE, and Mozambique, while exports to Gana, Bangladesh, Belgium, and Turkey increased sharply.

It is forecasted that in the coming months, Vietnam's rice exports will continue to face difficulties when rice prices are high, which causes customers to switch to suppliers that offer lower prices, especially India. According to the FAO, India's rice exports could rise to a record high of 16.2 million tons in 2021, up 12% from 14.5 million tons in 2020..

Vietnam's rice exports to China, Bangladesh and some markets in the European Union are forecast to increase thanks to increasing demand. According to data from the Chinese Customs, this country's rice imports in April 2021 reached 470 thousand tons, a sharp increase of 280,000 tons compared to 190 thousand tons of the same period last. While Bangladesh may increase rice imports to 2 million tons in fiscal 2020/21 as domestic prices continue to rise due to limited supply. Rice exports to the EU market increased thanks to the EVFTA, boosting Vietnam's rice competitiveness in this market.

Top rice exporters in Vietnam

Top Rice Export

Source: Ministry of Industry and Trade

Compiled by VietnamCredit

Vietnam Economy

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