The main reason for the rally of the US dollar over the Vietnam dong in October and November is due to psychological and seasonal factors, according to a report on the economic situation in November and the first 11 months of 2014 by a state body.
The fact that the differences in the price of gold bullion in the local and international market continued to expand, and the price of the greenback kept rising over other currencies on the international market, is the main psychological reason behind the rally of the US dollar locally, said the report recently released by The National Financial Supervisory Commission (NFSC).
As of November 24, the official rate of the greenback increased by VND134 per dollar, up 0.3 percent over the previous month, while the price on the free market rose VND155, equivalent to a 0.73 percent increase compared to last month, said the report.
At the same time, demand for payment in the greenback of local importers often increases at the end of the year, which has also helped raised demand for the foreign currency, according to NFSC.
However, the exchange rate will remain stable from now to the end of 2014 due to a trade surplus of nearly US$2 billion in the January-November period, said the report.
On December 5 at the Vietnam Development Partnership Forum 2014 (VDPF), with the theme “Economic institutional reform, enhanced autonomy and competitiveness of Vietnam’s economy”, Vietnam’s Prime Minister Nguyen Tan Dung said that in 2014, foreign exchange reserves of Vietnam have increased significantly.
Dung affirmed that Vietnam will continue to increase foreign exchange reserves to meet the international norm of ensuring 12 or more weeks of imports for the country in 2015.
The Prime Minister also affirmed that Vietnam will continue monitoring to ensure the value of the local currency, the Vietnam dong, and keep the exchange rate stable.
At the end of September, the Governor of the State Bank of Vietnam, Nguyen Van Binh said Vietnam’s foreign exchange reserves hit a record of more than $35 billion.
Vietnam’s total export value in 2014 is expected to grow by 13 percent to reach $150 billion for the first time. At the same time, Vietnam has also enjoyed a trade surplus for three consecutive years, and this year it is expected to run a trade surplus of at least $1.5 billion.
The foreign exchange (forex) rate between the US dollar and the Vietnam dong late last week fell by VND40-80 per dollar to around VND21,300-21,320 for bid and VND21,360 -21,390 for ask after information on the intervention in the forex market of the State Bank of Vietnam (SBV) was published.
According to the calculations of some commercial banks, by the afternoon of December 1, the central bank had sold about $ 1.1 billion to intervene in the local forex market.
In early October, the forex rate suddenly rose, bringing the price of the US dollar close to VND21,400 per dollar, after staying stable for the first nine months of this year due to speculation that the central bank would adjust the exchange rate.
The central bank, after evaluating that the rise of the forex rate was mainly due to psychological effects rather than supply matter, said that it would not adjust the official exchange rate, but is willing to sell foreign currency to the forex market if necessary.