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Vietnam’s weekly financial - monetary update (Week 51 – 2020)

Vietnam’s weekly financial - monetary update (Week 51 – 2020)

Thursday 24, 12 2020

Vietnam’s macro-economic overview

On the financial market, the deposit and lending interest rates at many commercial banks continued to be reduced in the first half of December 2020. This is a positive signal because it created favorable conditions for the recovery of the economy after suffering from the negative impacts of the Covid-19 epidemic. Thanks to the efforts to reduce interest rates of the State Bank and commercial banks, in general, the lending interest rates at banks have decreased although the rate of reduction has not corresponded with the decrease in deposit interest rates. In fact, as of early December 2020, the lending rates for production and business activities at commercial banks ranged from 4.5 to 6.5% / year for terms of less than 6 months and 5.5-7, 5% / year for terms from 6 to 12 months.

Meanwhile, according to a report made by the State Bank, by the end of October 2020, lending interest rates had decreased by 0.6-0.8% per year on average compared to the end of 2019. The reduction in lending interest rates has contributed to alleviate difficulties and increase access to loans for businesses and people. Thus, for the first time after many years, the VND lending interest rate has been low and equivalent to many countries in the same region. This is expected to create favorable conditions to support businesses to recover.
Vietnam’s macro-economic overview
In terms of trade, the export turnover of goods in November 2020 reached 25.24 billion USD, decreasing 7.4% against the previous month. Meanwhile, import turnover reached 24.69 billion USD, increasing by 1.5% over the previous month. With this result, trade surplus has swelled to record high in 11 months, reaching over 20 billion USD. In general, export has played an important role in the economy amid the Covid-19 epidemic.

Weekly financial - monetary situation and forecasts

Exchange rate

In the past week, the USD / VND exchange rate on the official market was stable, but experienced a fluctuation on the unofficial market. At VCB, compared to the previous week, the exchange rate of USD / VND was stable at 23,010 VND / USD (buying side) and 23,220 VND / USD (selling side). Compared to the beginning of 2020, the USD / VND has decreased by 10 VND / USD. 

On the unofficial market, the USD / VND exchange rate stayed unchanged on the buying side and decreased by 10 VND / USD on the selling side, to 23,200 VND / USD and 23,230 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 712 VND / USD lower than the ceiling price. Compared to the previous week, the USD exchange rate on the selling side decreased by 3 VND / USD to 23,787 VND / USD and was 50 VND / USD lower than the ceiling price.

Meanwhile, the central exchanged rate announced by the State Bank applicable to December 12, 2020 was 23,143 VND / USD, down 3 VND / USD compared to the rate announced the previous week. Since early 2020, the central exchanged rate has been adjusted to decrease by 30 VND / USD (equivalent to a decrease of 0.13%). 

Gold price

The world gold price increased in the context of an increase in the number of new Covid-19 infections in the US and production was much worse than forecast. The US dollar fell sharply, which had a positive impact on the gold market. It is forecasted that the gold price will increase in the coming time if the US Government and the Federal Reserve pumps money into the economy. Gold is also benefiting from fiscal program and looser monetary policy in Japan and Europe. However, the prospect of Covid-19 vaccine has limited the increase in gold prices.
Gold Price
At the end of the week, spot gold price was 1,865.7 USD / oz. Gold futures price in February 2021 on Comex New York was 1,866.9 USD / oz. On the Kitco trading exchange, spot gold prices were at 1,863.90 - 1,864.90 USD / oz, up 26 USD / oz (equivalent to an increase of 1.4%) compared to the previous week.

World gold price was about 52.18 million VND / tael, which is 3.3 million VND lower than the domestic gold price.
Domestically, the price of gold has increased. Specifically, in Hanoi, SJC gold bought-in and sold-out prices were54.95 and 55.45 million dong / tael, respectively.

Source: Ministry of Industry and Trade
Compiled by VietnamCredit

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Banking & Finance

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