SSI on July 19 released a report on the country’s financial and monetary market in June and July, noting that the forex market recorded strong fluctuations in the two months when the USD/VND exchange rate soared by VND150.
In the first two weeks of this month alone, the exchange rate jumped VND100, or 1.1%, to VND23,010 (buying rate) and VND23,080 (selling rate) on the inter-bank market. It also rose dramatically by VND360 to VND23,180 (buying) and VND23,230 (selling) in the free market. The difference of USD buying and selling prices surged from VND20 to VND50.
SSI noted the pressure for exchange rate increase in June was mainly caused by external and psychological factors. An array of currencies in the world sharply depreciated last month when the US officially imposed high tariffs on Chinese imports, leading to heightened risks of trade war escalation.
Meanwhile, the foreign currency supply and demand imbalance was not big enough to drive up the exchange rate strongly.
With the abundant foreign reserves of around US$65 billion, the SBV signalled that it is ready to make interventions to keep the exchange rate stable. In fact, it slashed the USD selling price from VND23,294 down to VND23,050 on July 3.
Since the beginning of July, the central bank has also kept the daily reference exchange rate almost unchanged, suggesting that it will not continue adjusting the rate. The forex rate set by commercial banks has also become stable, only the rate in the free market remains high.
SSI said the SBV’s pledge to keep the exchange rate stable, the abundant foreign reserves, and balanced foreign currency supply and demand are the factors supporting the exchange rate’s stability.