VCN - Recently, the USD exchange rate in local commercial banks has increased. Is this an alert for Vietnam’s currency market?
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|The increase in USD price is due to complicated development of Covid-19. Photo: Internet.|
On the morning of March 23, the central rate of VND versus USD announced by the SBV was 23,259 VND/USD, up 7 VND compared to last week - the highest central rate ever.
In the market, USD trading prices in banks continue to rise; the USD rate in the free market are traded at a high rate, 23,400 VND/USD. Thus, USD exchange rate in the free market increased more than 1.5% compared to the beginning of the year.
Aroundthe world, the US dollar index to measure the power of the USD against the world’s six major currencies remains strong at the peak of more than two years, with more than 120 points.This movement of the USD is said to be contrary to the USD depreciation rules when the US Federal Reserve (Fed) has twice lowered the emergency interest rate and launched a quantitative easing package up to 700 billion USD.
Explaining the cause of the USD exchange rate increase, Mr. Pham Thanh Ha, Director of Monetary Policy Department at the SBV said that the complicated development of the Covid-19 epidemic caused currencies to fluctuate, while the currencies of many of Viet Nam's major trading partners also depreciated. Although central banks have continuously made policy moves to support market liquidity, these policies need time to be applied before havingeffective impacts on the market.
"Along with that trend, fluctuations in the international market and the movement of the Covid-19 epidemic affecting domestic market sentiment also made the exchange rate ofVND versus USD rise," said Pham Thanh Ha.
Despite the upward movement, the SBV’s representative said that through monitoring and balancing the supply and demand of foreign currencies, there have been no big fluctuations so far, the foreign currency status continues to remain at a positive level, the market liquidity is smooth and the demands for legal foreign currencies are fully and promptly met.
Talking about the cause of abundant liquidity, the Director of the Monetary Policy Department said that, from the beginning of 2020 until the Lunar New Year, in the context of abundant foreign currency supply and favorable international market, the market exchange rate was fairly stable, the SBV continued to buy a large amount of foreign currencies to increase foreign exchange reserves.
Therefore, although the foreign exchange market was under certain pressure from developments related to the Covid-19 epidemic, the exchange rate fluctuations were not significant.In some days, the exchange rate dropped to close to the SBV’s buying rate and credit institutions continued to sell foreign currencies to SBV.
Despite the above statement, Mr. Ha said that the SBV would continue to closely monitor the movements of domestic and foreign markets, prevent possible scenarios, manage the central exchange rate flexibly, continue to use monetary measures and tools to stabilise the foreign currency market.
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“The SBV has been continuously buying large amounts of foreign currencies to supplement foreign exchange reserves, contributing to strengthening national financial and monetary security and increasing the intervention ability to the foreign exchange market when necessary. With such available foreign currency potential, the SBV is willing to intervene in the market when necessary, with the exchange rate lower than the current listed exchange rate to stabilise the foreign currency market, contributing to macroeconomic stability,”said the SBV’s representative.
By Huong Diu/ Huyen Trang