The State Bank of Vietnam (SBV) will keep the fluctuation of theVND/USD exchange rate at a maximum of 2 percent in 2015, as set in itspolicy for the year, despite the fact that the rate has already beenadjusted by 1 percent twice this year.
The centralbank raised the inter-bank average exchange rate between the VND and USDby 1 percent on May 7, from 21,458 VND to 21,673 VND per 1 USD. Banksmay set their rate within a range of +/- 1 percent of the SBV-setinter-bank average rate.
On January 7, the SBV also adjusted the inter-bank rate with an increase of 1 percent.
SBV Deputy Governor Nguyen Thi Hong said the 2 percent fluctuationrange was set on the basis of socio-economic development targets set bythe National Assembly and forecasts on macro-economy and the domesticand international monetary situation.
The recent adjustments were based on economic and psychological factors along with market expectations, she noted.
The SBV will continue to closely following changes in domestic andglobal markets and predictions to employ appropriate monetary policytools, ultimately keeping the exchange rate stable and within the setrange, she said.
Hong said that although rapidappreciation of the VND may benefit exporters, it will bedisadvantageous to manufacturers of export products made from importedmaterials, since they will have to pay more in VND to buy raw materials.
Data in 2013 showed that the textile and garmentsector imported 82.5 percent of the necessary materials, the woodproduct sector 70 percent, and the footwear industry 50-60 percent, allof which produce key exports of Vietnam.
If theexchange rate adjustment exceeds 2 percent, payments on the Government’sforeign debt obligations will be increased, negatively affectingefforts to control public debt within 65 percent of GDP. Businesses’foreign debt payments will also be raised accordingly.
The Deputy Governor also noted that the domestic currency is notovervalued, citing a recent study of IMF experts which said the VND/USDrate is in an alignment stage.
The set fluctuationrange will also help curb possible inflation, even though inflation iscurrently under control, she added.-VNA
The centralbank raised the inter-bank average exchange rate between the VND and USDby 1 percent on May 7, from 21,458 VND to 21,673 VND per 1 USD. Banksmay set their rate within a range of +/- 1 percent of the SBV-setinter-bank average rate.
On January 7, the SBV also adjusted the inter-bank rate with an increase of 1 percent.
SBV Deputy Governor Nguyen Thi Hong said the 2 percent fluctuationrange was set on the basis of socio-economic development targets set bythe National Assembly and forecasts on macro-economy and the domesticand international monetary situation.
The recent adjustments were based on economic and psychological factors along with market expectations, she noted.
The SBV will continue to closely following changes in domestic andglobal markets and predictions to employ appropriate monetary policytools, ultimately keeping the exchange rate stable and within the setrange, she said.
Hong said that although rapidappreciation of the VND may benefit exporters, it will bedisadvantageous to manufacturers of export products made from importedmaterials, since they will have to pay more in VND to buy raw materials.
Data in 2013 showed that the textile and garmentsector imported 82.5 percent of the necessary materials, the woodproduct sector 70 percent, and the footwear industry 50-60 percent, allof which produce key exports of Vietnam.
If theexchange rate adjustment exceeds 2 percent, payments on the Government’sforeign debt obligations will be increased, negatively affectingefforts to control public debt within 65 percent of GDP. Businesses’foreign debt payments will also be raised accordingly.
The Deputy Governor also noted that the domestic currency is notovervalued, citing a recent study of IMF experts which said the VND/USDrate is in an alignment stage.
The set fluctuationrange will also help curb possible inflation, even though inflation iscurrently under control, she added.-VNA
