Overseas remittances revive, US$10 billion to Vietnam in 2017

The State Bank of Vietnam’s (SBV) HCMC Branch, in its report released in late 2017, showed that US$4.55 billion had been remitted to HCMC from overseas by the end of November. 

The overseas remittances mostly came from the US (60%) and Europe (20%). With the rate, overseas remittances were expected to reach US$5.2 billion by the end of 2017, equal to, or a little bit higher than in 2016, but lower than in 2015.

On pre-Tet days, the dollar price decreased slightly. Vietcombank quoted the selling price at VND22,740 per dollar instead of VND22,745. SBV kept buying dollars with the net purchase volume reaching US$400-500 million on some days. 

An SBV source said by the end of the first week of February 2018, forex reserves had exceeded the US$57.5 billion threshold.

Director of SBV’s Forex Management Department, Nguyen Ngoc Canh, on February 8 told Tien Phong that overseas remittances had increased sharply, by 10.4% by the end of 2017.

Overseas remittances to Vietnam go through four channels – commercial banks, economic institutions, customs or post. About 72% of remittances go through commercial banks.

Overseas remittances to Vietnam have increased since 2010, reaching a peak of US$13.2 billion in 2015. However, they unexpectedly dropped by 33% in 2016 to US$9 billion. 

The World Bank’s Migration & Development Report released in October 2017 predicted that overseas remittances to Vietnam in 2017 might decrease by 10% as a result of US immigration and interest rate policies, and Vietnam’s zero percent dollar deposit interest rate.

However, estimates by the State Bank of Vietnam showed that overseas remittance flow has recovered.

Canh said though the State Bank set the ceiling dollar deposit interest rate at zero percent, overseas remittances to Vietnam have remained stable.

“The overseas remittances to Vietnam are not affected by the interest rate gap between the dollar deposit interest rates in Vietnam and the rest the world, or the SBV’s dollar interest rate policy,” Canh said.

However, according to the National Center for Socio-economic Information and Forecasting (NCIF), overseas remittances in 2018 will bear the impact from the US policy on restricting immigrants and the US FED’s policy on raising the prime interest rate. 

These will affect remittance flow, since the US is the biggest source of overseas remittances to Vietnam, accounting for 60%.

Meanwhile, some analysts believe overseas remittances will be stable thanks to the increasingly high number of Vietnamese workers overseas, macroeconomic stability, and the flexibility of Vietnam’s monetary policy.