Central bank adds $4 bln to Vietnam foreign reserves in Q1

The State Bank of Vietnam (SBV) said it net bought $4 billion of foreign currencies in the first quarter of this year to pump more Vietnamese dong into the market and improve the banking system’s liquidity.

SBV Governor Nguyen Thi Hong made the statement at a monthly government meeting on Monday. She stressed the collapse of some banks in the U.S. and the incident at Saigon Commercial Bank (SCB) last October are lessons for the Vietnamese banking sector.

Therefore, she requested banks in the country to focus more on stable and safe operations, while ensuring liquidity for the public.

For future tasks, Hong said the SBV is cooperating with relevant authorities to amend Circular 16/2021 on credit institutions and branches of foreign banks buying or selling corporate bonds.

"The move aims to resolve problems on the market, ensure the stability of the banking system, learn lessons from the U.S., and outline measures for debt restructuring."

For the real estate and corporate bond markets, the SBV governor referenced advice from the International Monetary Fund (IMF), which said when evaluating property projects and businesses, a third party is needed such as auditors to identify temporary difficulties.

The IMF also suggested that measures be needed to avoid risks related to bonds and property investments to balance the books at credit institutions.

Hong said that credit growth reached 2.06% in the first quarter of this year, lower than in previous years barring 2022.

Currently, the SBV is implementing a number of solutions to support credit growth through monetary regulation, as well as solutions to restructure debt repayment terms and debt groups.

A deal struck by Vietnamese lender VPBank to sell a 15% stake to Japan’s Sumitomo Mitsui Banking Corp. (SMBC) for about $1.5 billion through a private placement is an indicator of investor trust in the Vietnamese market, while some challenges are only temporary, the governor said.