Vietnamese dong weakens less against US dollar than other currencies

By Tuong Minh
Tue, October 4, 2022 | 3:12 pm GMT+7

The Vietnamese dong has so far this year fallen about 4% against the U.S. dollar, according to the State Bank of Vietnam, but the depreciation is smaller than popular currencies worldwide.

The SBV decided to raise key policy rates by one percentage point on September 22, taking effect the next day, following a sharp rise in U.S. interest rates by the U.S. Federal Reserve.

Unlike other countries that have been seeking to bring down double-digit increases in inflation, Vietnam's consumer price index (CPI) in September rose 4.01% from December last year, with the figure for the first nine months only 1.88%.

The U.S. dollar is rising worldwide. Photo courtesy of Vietnam News Agency.

The U.S. dollar is rising worldwide. Photo courtesy of Vietnam News Agency.

On the morning of September 20, currencies having depreciated much against the U.S dollar compared to the end of 2021 included the Japanese yen (-25.18%), Chinese yuan (-10.9%), euro (-13.49%), and British pound (-20.02%).

Fitch Ratings stated on September 27 about Vietnam: “We now believe that further policy rate hikes are likely in the near term, partly in order to reduce the risk that exchange-rate weakening could add to imported inflation, and further upward pressure on deposit rates is likely as US dollar interbank rates push up against Vietnamese dong interbank rates.”

A trade surplus and moves by the SBV have supported the Vietnamese dong against other currencies like the euro, which is facing its own pressures stemming from the Russia-Ukraine conflict and an economic slowdown.

The SBV has been selling large amounts of U.S dollar from its foreign exchange reserves and has withdrawn trillions of Vietnamese dong (VND1 trillion = $41.87 million) through open market operations to maintain banking system liquidity and indirectly increase interbank interest rates.

Vietnam’s economic growth of 8.83% year-on-year in the first nine months is the highest recorded in 12 years. The figure for the same period in 2021 and 2020 - both pandemic years, was 1.42% and 2.12%, respectively. The economy expanded 2.58% last year.

Meanwhile, the January-September trade surplus hit $6.52 billion, a big leap compared with a trade deficit of $3.44 billion in the same period last year, according to Vietnam’s General Statistics Office. For the whole year, the government agency forecast late September that the national economy could expand 8%, much higher than the 7% target.

Similarly, analysis by Malaysia-based Maybank expects Vietnam’s GDP to grow 8% in 2022, up from a previous forecast of 6.9% by the bank, supported by retail sales on an improved labor market and the return of tourism following Covid-19 lockdowns. Maybank’s 2023 Vietnam GDP forecast was downgraded to 6% from 6.4%, based on the rising probability of a U.S. recession that could reduce U.S. demand for Vietnamese goods.

Jeffrey Roach, chief economist at LPL Financial, was quoted by Fox Business on October 3: "The strong U.S. dollar will provide a tailwind for GDP growth [of the U.S.] in the third quarter. However, significant weakness in Europe and Asia will diminish demand for U.S. exports as the global economy heads into the winter months."

Fox Business noted that there were downsides to the U.S. dollar's strength: executives of multinational corporations with headquarters in the U.S. have said the muscular greenback is dinging their profits.

In Vietnam, the State Bank set the central exchange rate at VND23,371 on Tuesday morning, up from VND23,400 last Friday. Vietcombank quoted a USD at VN23,750 and VND24,030 (buying and selling), an increase of VND30.

The rate on the free market was flat on Tuesday morning, with a buying level of VND24,000 and selling at VND24,200. Meanwhile, the buying and selling prices for the euro were VND23,400 and VND23,900, respectively, up VND10 compared to last Friday.

Comments (0)
  • Read More
Techcom Securities becomes largest broker in Vietnam by capital base

Techcom Securities becomes largest broker in Vietnam by capital base

Techcom Securities JSC (TCBS) has become the largest securities company in Vietnam by charter capital after finishing a rights offering last week.

Finance - Tue, November 19, 2024 | 9:11 am GMT+7

Vietnam airport operator ACV looks to better exploit non-aviation service potential: exec

Vietnam airport operator ACV looks to better exploit non-aviation service potential: exec

Vietnam's airports operator ACV expects to earn $145 million from non-aviation services this year, accounting for around 18.83% of its total revenue, which is modest compared to other countries, said deputy general director Nguyen Duc Hung.

Companies - Tue, November 19, 2024 | 7:45 am GMT+7

The Investor to host seminar on removing legal bottlenecks for infrastructure, property investment

The Investor to host seminar on removing legal bottlenecks for infrastructure, property investment

A seminar themed “Removing legal bottlenecks for infrastructure and property investment” will be organized by The Investor in Hanoi on Tuesday.

Economy - Tue, November 19, 2024 | 7:00 am GMT+7

Indonesia promises Asia-Pacific investors more incentives

Indonesia promises Asia-Pacific investors more incentives

Indonesian President Prabowo Subianto recently told the press that he will create more incentives and expand special economic zones (SEZs) so as to lure investors from Asia-Pacific.

Southeast Asia - Mon, November 18, 2024 | 11:01 pm GMT+7

Indonesia, Brazil enhance aviation cooperation

Indonesia, Brazil enhance aviation cooperation

Indonesia's state-owned aircraft manufacturer, Dirgantara Indonesia (DI), and Brazilian aerospace company Embraer have signed a memorandum of understanding (MoU) to expand collaboration in the commercial aviation sector.

Southeast Asia - Mon, November 18, 2024 | 11:00 pm GMT+7

Indonesia eyes to become member of BRICS

Indonesia eyes to become member of BRICS

Indonesian President Prabowo Subianto has shown his country’s desire to become a member of the BRICS - the alliance of major emerging economies initiated by Brazil, Russia, India, China, and South Africa.

Southeast Asia - Mon, November 18, 2024 | 10:57 pm GMT+7

Former Party chief, chairman of Vinh Phuc province face disciplinary action

Former Party chief, chairman of Vinh Phuc province face disciplinary action

Vietnam’s Central Inspection Committee has proposed disciplining Pham Van Vong, former Party chief of Vinh Phuc, and Phung Quang Hung, former chairman of the northern province, for violations related to Phuc Son Group.

Politics - Mon, November 18, 2024 | 9:17 pm GMT+7

Shaping a waterway into a key shipping channel: Viconship gets dredging nod

Shaping a waterway into a key shipping channel: Viconship gets dredging nod

A major dredging project will allow safer ship navigation and increased cargo transportation capacity on the Hai Phong shipping channel, thereby enhancing competitiveness of Vinconship’s port system, says the company.

Companies - Mon, November 18, 2024 | 7:08 pm GMT+7

Former assistant to State President appointed general director of state-owned financial firm HFIC

Former assistant to State President appointed general director of state-owned financial firm HFIC

Truong Tuan Anh, an official at the State President Office and former assistant to a state president, has been appointed general director of Ho Chi Minh City Finance and Investment Stated-owned Company (HFIC).

Companies - Mon, November 18, 2024 | 5:35 pm GMT+7

MBBank’s takeover of weak OceanBank to have limited impact on its credit profile: Fitch

MBBank’s takeover of weak OceanBank to have limited impact on its credit profile: Fitch

Military Commercial Joint Stock Bank's (MBBank) takeover of Ocean Commercial Bank Limited (OceanBank) will have limited financial impact on the former’s credit profile, Fitch Ratings said Monday.

Banking - Mon, November 18, 2024 | 5:06 pm GMT+7

Win-win philosophy indispensable for sustainable growth: Bamboo Capital founder

Win-win philosophy indispensable for sustainable growth: Bamboo Capital founder

A win-win cooperation strategy is not just desirable, but a necessary condition for sustainable development, says Nguyen Ho Nam, founder of Vietnam’s private conglomerate Bamboo Capital Group.

Bamboo Capital - Mon, November 18, 2024 | 4:46 pm GMT+7

Vietnam central bank resumes selling gold after 1-month hiatus

Vietnam central bank resumes selling gold after 1-month hiatus

The State Bank of Vietnam (SBV), the country's central bank, on Monday announced that it will reactivate the sale of SJC-branded gold bars to meet market demand.

Banking - Mon, November 18, 2024 | 4:02 pm GMT+7

Vietnam 2nd biggest market of Thai giant Central Retail in Jan-Sept

Vietnam 2nd biggest market of Thai giant Central Retail in Jan-Sept

Thailand’s leading retailer Central Retail earned a revenue of THB37.99 billion ($1.09 billion) in Vietnam in the first nine months of this year, up 0.9% year-on-year.

Companies - Mon, November 18, 2024 | 4:00 pm GMT+7

Singapore firm to invest in $19.7 mln garment factory in central Vietnam

Singapore firm to invest in $19.7 mln garment factory in central Vietnam

Singaporean-based HGQ ASIA Pte., Ltd will pour nearly VND500 billion ($19.7 million) into building a garment factory in the south-central province of Binh Dinh.

Industries - Mon, November 18, 2024 | 2:23 pm GMT+7

IP developer KBC to raise $236 mln to restructure debts, augment capital

IP developer KBC to raise $236 mln to restructure debts, augment capital

Kinhbac City Development Holding Corporation (KBC), a leading industrial real estate developer in Vietnam, will offer 250 million shares to 11 investors for more than $6,000 trillion ($236.4 million) to restructure its debts.

Companies - Mon, November 18, 2024 | 2:17 pm GMT+7

Vietnam's chemical giant Vinachem targets $500 mln trade turnover with Brazil in 2030

Vietnam's chemical giant Vinachem targets $500 mln trade turnover with Brazil in 2030

Vietnam’s state-run chemical group Vinachem and Brazil’s major trading firm Oceanside One Trading LLC say they will strive to boost their bilateral trade to $500 million in 2030.

Companies - Mon, November 18, 2024 | 12:32 pm GMT+7