Vietnam reserves to increase to $95 bln by year-end: Moody’s

Vietnam’s foreign-exchange reserves excluding gold are forecast to rebound to $95 billion by the end of this year as the central bank rebuilds its stockpile, Moody’s Investor Service said.

The country’s reserves stood at $88.3 billion in January 2023, according to the International Monetary Fund (IMF).

Nishad Majumdar, a sovereign analyst at Moody's Singapore, noted that the recent appreciation of the Vietnamese dong, which reflects the improved external position, will give the State Bank of Vietnam space to rebuild the forex buffers that were spent down during the U.S. dollar’s rally last year.

According to the analyst, the recovery in tourism and steady foreign direct investment inflows will help boost Vietnam’s reserves even as exports weaken.

The VND has advanced 6% in the past six months, joining a rally in Asian peers, as the USD has weakened.

Majumdar recommended Vietnam prioritize exchange rate stability as a means to stabilize inflation and create certainty for inbound investors.

Vietnam’s exports in the four months were estimated at $108.57 billion, down 11.8% from a year earlier. In April alone, performance was around $27.54 billion, down 7.3% compared with March and 17.1% against April last year.

Import spending in the period was estimated at $102.22 billion, down 15.4% year-on-year. Trade surplus reached $6.35 billion, much higher than the $2.35 billion in the same period last year.

Between January and April, disbursed FDI in Vietnam totaled $5.9 billion, down 1.2% year-on-year, and pledged FDI was $8.9 billion, down 17.9%.

Tim Leelahaphan, Standard Chartered economist for Thailand and Vietnam, said in the global bank’s latest update report on Vietnam’s economy: “The SBV has shifted to a pro-recovery stance since the start of 2023. In addition to cutting rates, it is aiding businesses facing difficulties by giving them more time to address liquidity shortages.”

“In April, the central bank allowed easier loan terms, including delaying loan repayments, by up to 12 months, and providing rate waivers. The property market may need further liquidity support, as measures so far appear to have only reduced short-term repayment pressure,” he said.