Vietnam steadfast on keeping exchange rate stable, fighting forex hoarding

The State Bank of Vietnam (SBV) will stay steadfast on keeping the USD/VND exchange rate stable and dampening forex hoarding by those expecting further dong devaluation, a central bank official has stated.

Speaking at a bank-business matching event in Dak Lak province on Friday, Deputy Governor of the SBV Dao Minh Tu asserted that the USD/VND rate is fluctuating within the limits foreseen by the central bank.

“We will manage the exchange rate so there will be no chance for forex hoarders expecting the dong to weaken further,” Tu said, adding that businesses can be assured of forex rate stability.

He attributed ample forex reserves, continued growth in foreign direct investment, and positive forex supplies to his commitment.

However, Tu noted that the forex rate should be allowed to move up and down to reflect market movements. “There can be no invariability in the exchange rate.”

At a dialogue between Prime Minister Pham Minh Chinh and foreign businesses on Monday, Deputy Governor of the SBV Pham Thanh Ha reiterated the message of keeping the exchange rate stable.

The SBV stands ready to make interventions when necessary, Ha affirmed. The Vietnamese banking system met the demand for forex in 2022 even when the U.S. Federal Reserve (Fed) continued its tightening cycle.

As central banks continue monetary tightening, the SBV is managing the money market effectively and keeping the USD/VND rate in a moving band of 3.9%, which Ha said was a proper movement in comparison with regional countries.

In its lates report, KB Securities Vietnam JSC predicted the USD/VND rate in the interbank market to increase 3.5% this year, to VND24,460 a dollar.