Vietnamese workers living abroad sent home US$17 billion last year, making Vietnam the world's ninth biggest remittance beneficiary, a World Bank report says.
After a long period of stability, pressure from global markets has caused the Vietnamese dong to depreciate significantly against the US dollar in the past few days.
After being relatively stable last year, the foreign exchange rate of the Vietnamese dong against the US dollar is forecast to be under greater pressure in 2020 due to both internal and external headwinds.
The Vietnamese dong was expected to remain broadly stable against the US dollar over the remainder of 2019 and to be slightly weaker on average over 2020, buoyed by robust foreign direct investment (FDI) inflows, dollar purchases by businesses, and a healthy foreign reserve position, experts forecast.
Commercial banks have consecutively lowered the value of the US dollar against the Vietnamese dong during the final days of 2018, helping the USD/VND exchange rate close the year under control.
The consumer price index (CPI) of Hanoi saw a decrease of 0.26% in November against the previous month and down 4.17% year-on-year, announced the city’s Department of Statistics.
Hanoi’s consumer price index (CPI) in October increased 0.24% month-on-month and 4.09% year on year as transport costs rose 1.42% due to the petrol price hikes, according to the Hanoi Statistics Department.
Vietnam’s economy grew at a fast pace in the first half of 2018 compared to the previous years, but there are indications that it is losing momentum – a problem not only in the last half of the year but also in 2019 and 2020.
VOV.VN - Vietnam shipped an estimated 382,000 tons of rice valued at US$195 million in July, bringing the total rice exports for the first 7 months of the year to 3.9 million tons worth nearly US$2 billion, up 12.2% in volume and 29.2% in value, according to the Processing and Market Development Authority (AgroTrade).
The Government will have to decide either to devalue the Vietnamese dong further against the US dollar to support exports and avoid cheaper Chinese goods to flood in the local market, or keep the USD/VND exchange rate stable to avoid increased public debt and control inflation as the US-China trade war accelerates.
Vietnam’s central bank has to engage in a delicate balancing act as the US-China trade war exerts inflationary pressures on the dong.
The US dollar has appreciated significantly against the Vietnamese dong in the past few days in the wake of the US Federal Reserves (Fed)’s interest rate hike last week, but local officials and experts are not too worried, believing these hikes won’t affect Vietnam’s economy in any major way.
Domestic commercial banks on February 8 continued devaluing the US dollar against the Vietnamese dong for the second consecutive session, despite a rise of the greenback in the global market.
Commercial banks are optimistic about the foreign exchange market in 2018, noting that the market would be stable with the Vietnamese dong devaluing slightly by some 0.5-1 percentage points to VND22,710 to VND22,950.
The market research company Market Intello forecast that the average interest rate this year would reduce by 0.5 percentage points compared with 2016.
While the strengthened greenback is making waves in the international market, it is a double-edged sword for scores of Vietnam-based exporters and importers.
Malaysia’s central bank has announced measures to increase demands for the ringgit and bring down the vulnerability of the domestic currency against the US dollar.
The sharp appreciation of the US dollar after the news about the US election and the fall of the Chinese yuan to a 6-year low could create risks for Vietnam’s economy.
The reference exchange rate on October 12 was set at VND21,997 for one US dollar, up VND10 from the day before.
The reference exchange rate on October 6 was set at VND21,971 for US$1, up VND7 from the day before.