|Illustrative image (Photo: plo.vn)
According to a recent report by SSI Securities Corporation, the continued devaluation of Chinese yuan could pressure the Vietnamese dong. However, after overcoming the most difficult period – beginning of the US-China trade war, market members and management agencies are now prepared.
The company predicted the volatility of the US dollar against the Vietnamese dong would be the same as 2018 with little chance for sudden volatility.
The Vietnamese dong lost about 2.3 percent against the US dollar in 2018, much lower than the losses of euro, sterling and yuan which were respectively at 4.5 percent, 5.7 percent and 5.4 percent.
According to MB Securities Joint Stock Corporation, the forex market would still be under pressure from US Federal Reserve’s plan to raise rates but the pressure would not be too huge thanks to the Vietnam’s abundant foreign currency reserves, which are estimated at around 63.5 billion USD.
The company said large US dollar supply and a stable macro-economic situation would enable the State Bank of Vietnam to manage exchange rates flexibly.
In addition, the policy of zero interest rate for deposits in US dollars which encourage people to sell US dollars and hold Vietnamese dong would create room for the central bank to maintain the exchange rate at a reasonable level.
MB Securities forecast that the exchange rate between the Vietnamese dong and US dollar would increase slightly by 1.5-2 percent in 2019.
Financial and banking expert Nguyen Tri Hieu said the US dollar would continue to strengthen against the Vietnamese dong because of the impacts of the US-China trade war on global trade together with expectations about more Fed rate hikes in 2019.
Economist Can Van Luc said the US economic growth was expected to slow down in 2019 and the Fed would slow its rate hikes.
The Vietnamese dong would depreciate by around 2.5-3 percent against the US dollar in 2019, Luc forecast.
The State Bank of Vietnam said that it would keep a close watch on macro-economic developments and financial and monetary markets to intervene when necessary to stabilize the markets.