Experts believe in SBV's effort to keep forex rate under 2 pct

Experts said the State Bank of Vietnam (SBV) will succeed in keeping the VND-USD exchange rate from fluctuating to below 2 percent this year.

Some have been concerned that the continuing sharp fall in prices of oil, which is one of Vietnam's key exports, will negatively impact on foreign currency supply and demand.

However, Deputy Director of the Central Institute for Economic Management Vo Tri Thanh said at a recent conference that the SBV will successfully keep the foreign exchange rate from fluctuating to below 2 percent, owing to supply and demand of the country's foreign currency sources, as well as the central bank's competence in successfully managing the forex market for the past few years.

He added that Vietnam's foreign currency reserves have currently hit a record high of roughly US$35 to 38 billion, while balance of payments this year are forecast to have reported a surplus of roughly US$7 to 8 billion.

However, Thanh noted that it will be important to see how the central bank adjusts the rate to stabilise the forex market, while avoiding negatively affecting other indices.

The Bao Viet Securities Co. (BVSC) also forecast that the forex market will remain stable in 2015 as well. The company anticipates the exchange rate of the dong against the dollar to vary between VND21,600 and VND21,800 till the end of this year.

The forex market will still experience ‘rising waves.' However, the central bank will successfully intervene to keep the exchange rate fluctuation within the set target.

Trust in the SBV’s successful policies formulated over the last two years has also helped the central bank execute its policies more effectively, BVSC said.

However, BVSC said the central bank could consider the devaluation of the dong against the dollar and implement the devaluation with a certain timeline, in a bid to boost the competitiveness of Vietnamese exports.

Source: VNA

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