Last Updated: Monday, April 29, 2013 05:00:00
The International Monetary Fund is not very hopeful that Vietnam can make further interest rate cuts this year.
“While headline inflation has come down, core inflation (excluding raw food and energy) remains high, limiting the room for rate cuts,” it said in a release at the conclusion of a mission to Hanoi and Ho Chi Minh City from April 8 to 25 for the 2013 Article IV Consultation discussion with Vietnamese authorities. (more…)
At the Spring Economic Forum 2013, organized in the central province of Khanh Hoa from April 5-6, several delegates were of the view that the economic restructuring program started in Vietnam some years ago has been moving at far too slow a pace.
Incomplete Van Phong International Port in the central province of Khanh Hoa is an example of wasted capital (Photo: SGGP) (more…)
October CPI continues to climb
October’s Consumer Price Index (CPI) saw a slight increase of 0.85 percent compared with the previous month and a year-on-year increase of 7 percent.
This drove the CPI in the past ten months up to 9.66 percent in comparison with the same period last year, said the General Statistics Office (GSO) on October 24. (more…)
As Vietnam wins a yearlong battle to tame inflation and stabilize its currency, the spotlight is moving to the drag on growth from undercapitalized banks that have channeled credit to the nation’s state-owned companies.
VietFinanceNews.com – Vietnam’s dong fell as the central bank lowered its daily reference rate for the first time since August. Government bonds were little changed.
The State Bank of Vietnam fixed the reference at 20,638 per dollar, compared with 20,628 yesterday, according to its website. It last adjusted the measure on Aug. 24. The dong is allowed to trade up to 1 percent on either side of the rate and it can move outside the band on the so-called black market. The currency also dropped on speculation companies stepped up dollar purchases to pay for imports and redeem overseas debt.
VietFinanceNews.com – Vietnamese inflation slowed for the first time in more than a year, bolstering the government’s scope to support economic growth by lowering borrowing costs.
Consumer prices climbed 22.42 percent in September from a year earlier, easing from a 23.02 percent pace in August, according to figures released by the General Statistics Office in Hanoi today. That’s the first deceleration since August 2010. Prices rose 0.82 percent in September from August.
Vietnam’s government said Aug. 25 the nation’s central bank will leave so-called policy interest rates unchanged for now and consider cutting them if inflation slows. Asian officials from the Philippines to South Korea and China have avoided monetary tightening in recent weeks as concern grows the world economy may be on the brink of another recession.
VietFinanceNews.com – Vietnam’s banking system outlook over the next 12 to 18 months remains negative, in line with the country’s sovereign debt, Moody’s Investors Service said, citing concerns about falling profits and poor asset quality.
Domestic economic imbalances pose a risk to banks’ asset quality and make funding more difficult, Moody’s said in a report today. The quality of assets held by banks is “far worse” than implied by officially reported non-performing-loan figures, and some companies have begun reducing deposits due to refinancing difficulties and
Vietnam is struggling to contain the fastest inflation in Asia and facing slower growth and a persistent trade deficit. Its economy is vulnerable to systemic risk resulting in part from undercapitalized banks, rising debt and deteriorating corporate profits, Credit Suisse Group AG (CSGN) said this week.
VietFinanceNews.com – The State Bank of Vietnam said it will keep the U.S. dollar-Vietnamese dong exchange rate within a 1% band until the end of the year.
It also said in a statement late Monday that the country may record a current account surplus of $2.5 billion to $4.5 billion for 2011, adding that foreign currency reserves have risen significantly recently.
“In all circumstances, the central bank will be able to stabilize the exchange rate and the foreign exchange market,” the central bank said in the statement.
VietFinanceNews.com – The importance of keeping exchange rates under control to stabilise domestic gold prices in line with the world market has never been more pertinent.
In recent days, gold prices have hit record highs in both Asian and global markets. Vietnam’s gold market has also experienced wild fluctuations, forcing the State Bank of Vietnam (SBV) to import a large volume of gold.
In the current context, soaring gold prices have brought pressure to bear upon the exchange rate between the Vietnam dong (VND) and the US dollar (USD).
Unrelenting pressure
According to economists, there are three main factors, namely the impact of the gold market, high foreign currency credit, and growing demand for foreign currency before the end of the year. The current ”gold fever” in the domestic market, in part, contributes to the increasing exchange rate between the VND and USD, even though it remained rather stable in the past three months. On August 24, the Vietnam Bank for Foreign Trade (Vietcombank) announced the exchange rate at VND20,830-20,834/USD, up more than VND30/USD compared to the previous day.
Dr. Le Tham Duong, head of the business administration faculty of Ho Chi Minh City Bank University, says that the recent import of gold has led to an increase in the import surplus and the value of the US dollar.
Dr. Duong says that Vietnam has imported three tonnes of gold despite wild fluctuations in the world market.
Economists say that the foreign currency market is likely to face a difficult time as many businesses have to pay their loans in USD in the coming months.
The SBV’s recent statistics show that foreign currency credit in June rose by more than 23 percent, while VND credit only saw a 3-percent increase.
General Secretary of the Vietnam Bank Association, Duong Thu Huong, says there will be a high demand for USD in the next few months.
Her view is shared by financial specialist Nguyen Tri Hieu, who says that businesses will buy a large amount of USD to pay off their bank loans. They will also borrow USD from banks, change it into VND, and then send the money back to banks to enjoy higher interest rates. As a result, commercial banks will also buy USD to meet the increasing customer demand. All these will raise the value of US dollar.
Stabilising the value of VND
Judging from Vietnam’s overall balance of payment in 2011, which show an estimated surplus of US$2.5-4.5 billion, the SBV has announced its plan to stabilize the VND-USD exchange rate.
Dr. Nguyen Thi Mui, member of the National Advisory Council for Monetary Policy, notes that there is a big gap between supply and demand for USD and Vietnam’s import surplus will remain high. It is essential to keep a balance between supply and demand while restoring investors’ trust in VND, Dr. Mui says.
Many people and businesses are worried about the current trade deficit, high interest rates and foreign exchange rates. To ease their minds, the SBV has purchased over US$6 billion.
April 27 2011
VietFinanceNews.com – The central bank’s measures on stabilizing the foreign currency market have proved fruitful as people have been eager to sell US dollar to commercial banks, financial experts said.
Tran Anh Tuan, general director of NamABank, said the central bank’s foreign exchange rate measures got positive result as individuals and businesses preferred to sell US dollar to commercial bank.
VietFinanceNews.com – Despite the state’s ban on listing prices in foreign currencies, especially U.S. dollars, and the threat of stricter enforcement against violations, many businesses in Ho Chi Minh City these days still list their prices of goods and services in the dollar.
This is common at travel companies, tourist resorts, beauty parlors and motorbike shops. Listing the prices of goods and services in foreign currencies not only goes against the law but hurt the consumers’ interest as well.
Violation
T., resident of HCM City’s District 3, said he asked Perfect Tours Travel Company, located at 273B An Duong Vuong St., Dist. 5, to complete and submit his US visa application for him.
VietFinanceNews.com – The price of gold in Vietnam jumped by VND150,000 a tael (1.2 ounces) over last weekend on March 14 as the global price raised on rising demand for the metal as a hedge against crisis after a strong earthquake hit Japan.
Sacombank Jewelry Company bought gold at VND37.13 million and sold at VND37.21 million as of 9:15 am local time.
Most foreign exchange points in Ho Chi Minh City stopped transactions in US dollar on March 11, due to fear of inspections from relevant authorities leading customers completing transactions in banks.
Three days ago, foreign exchange points maintained normal operations while announcing trading at VND21.400 to US$1. They now refuse to buy the dollar and have stopped all dealings.
An employee at a gold shop said that since the authorities had been cracking down on foreign exchange traders for the last few days, gold shops dared not transact in dollars publicly any longer.
Many shops traded mainly in gold, especially gold jewellery and others suspended all foreign currency transactions.
VietFinanceNews.com – The central bank’s strong-worded warnings to foreign currency trading outside banks have sent ripples through the black market, as most private forex counters in Hanoi and then HCMC have refrained from money dealings these days.
Money changers in Hanoi City succumbed to the warnings first, as most dealers refused trading on Monday, while the phenomenon spread to HCMC a day later. Those in need of U.S. dollars now find it difficult to buy the greenback on the “black market”, which somewhat lends support to the local currency.
Headquarters of Vietnam National Bank
Vietnam is cracking down on unauthorized trading in U.S. dollars in an effort to bolster the country’s dwindling foreign reserves and restore confidence in the local currency, the latest attempt to bring some stability to the Southeast Asian economy.
Authorities in Hanoi said they will enforce long-standing but frequently flouted laws banning the use of the dollar to pay for goods and services, while the central bank said it would sharply increase fines for those violating the regulations, which also prohibit exchanging Vietnamese dong for dollars and other currencies on the black market.
The campaign began with the arrest this week of four people in the capital who were accused of trading nearly $400,000 outside the official foreign-exchange system. Analysts said the arrests were a clear indication the government is serious about following through with its threats to curb the black market.
VietFinanceNews.com – Vietnam’s central bank set the exchange rate for the U.S. dollar at VND20,673 Thursday, up from VND20,668 Wednesday.
Traders and bankers in Hanoi and Ho Chi Minh City said gold-shop rates fell after local authorities launched intensive operations to eliminate dollar trading activities in the free market yesterday afternoon in large cities across the country.
VietFinanceNews.com – VinaCapital has expressed belief in Vietnam ’s economic development, saying it is still one of the world’s leading emerging economies and a destination for foreign investors.
The financial group CEO, Don Lam said at a press briefing in Ho Chi Minh City on March 9 that in recent meetings with foreign investors, VinaCapital continued to hear their recognition of the Vietnamese economy’s long-term potential. They, however, expected Vietnam ’s reaction to economic challenges in 2010-11.
VietFinanceNews.com – The dollar price has been decreasing in recent days, which has prompted people to rush to sell dollars to stop losses. Meanwhile, the free market has halted transactions, which has been blamed on the drastic measures by the State Bank of Vietnam to stabilize the dollar price.
The dollar market has been continuously going up and down since February 24, one day after the government announced the resolution to stabilize the macro economy. However, the downward trend proves to be clearer. On March 4, after a lot of ups and down, the dollar price on the black market dropped to 21,730-21,800 dong per dollar (purchase and sale prices), a decrease of 700 dong per dollar from the price one week earlier.
Vietnam’s government bonds fell this week, pushing the yield on benchmark five-year notes to a nine- month high, as concern inflation will gather pace curbed demand for fixed-income assets. The dong strengthened.
The yield on five-year notes climbed five basis points to 11.63 percent, the highest level since June 7, according to a daily fixing from banks compiled by Bloomberg. The rate was 11.53 percent yesterday. A basis point is 0.01 percentage point.
Prime Minister Nguyen Tan Dung said March 2 that fighting inflation was now the “top priority.” The State Bank of Vietnam lifted its seven-day reverse repurchase rate, or what it charges commercial banks in daily open-market operations, to 12 percent from 11 percent on Feb. 22. The government raised domestic fuel prices by as much as 24 percent in February, when inflation hit a two-year high of 12.3 percent, and electricity tariffs increased more than 15 percent this month.
VietFinanceNews.com – Vietnam’s foreign exchange reserves dropped to more than $10 billion last year, from $16 billion in late 2009.
“The year 2010 left several difficulties as well as favourable points for Vietnam’s economy,” Planning and Investment Minister Vo Hong Phuc was quoted by the Vietnam Economic Times newspaper as saying.
Phuc also said gross domestic product grew 6.8 percent last year with an annual inflation rate of 11.75 percent, adding Vietnam needed to work harder to achieve socio-economic targets for 2011.
VietFinanceNews.com – New low denomination notes of Vietnamese dong have already been disbursed in the country’s economic hub, Ho Chi Minh City to satisfy local residents’ demand for exchanging new notes during Tet – a traditional custom for the Lunar New Year in Vietnam.
The State Bank’s branch in Ho Chi Minh City reportedly pumped a large volume of VND10,000 (0.5 cents)-notes in January against the volume distributed in previous months.
VietFinanceNews.com – Vietnamese banks have ceased exchanging large-denomination dollar banknotes for two-dollar bills, local media reported Thursday.
On December 12, Saigon Commercial Bank launched the program to meet the demands of locals that prefer the greenback for use as li xi (lucky money) during the Lunar New Year festival, which begins early next month. Other lenders followed suit.
VietFinanceNews.com – The information that a bank in Vietnam offers to provide 2-dollar banknotes to people has immediately sparked criticism of “lending a hand to the dollarisation” in Vietnam.
Several days ago, Saigon Bank (SCB) announced that it will provide 2-dollar banknotes to those, who want to use them as li xi (the lucky money given to children or to others as presents on Tet).
