No big changes forecast in exchange rate, interest rate in 2019
No big changes in exchange rate, interest rate in 2019: research institute
There would be no big fluctuations in the foreign exchange rate and interest rate in 2019 as pressure caused by the normalization of monetary policy in major economies in the world has eased, according to the Vietnam Institute for Economic and Policy Research (VEPR).
Hanoi(VNA) – There would be no big fluctuations in the foreign exchange rate andinterest rate in 2019 as pressure caused by the normalization of monetarypolicy in major economies in the world has eased, according to the Vietnam Institutefor Economic and Policy Research (VEPR) under the VNU University of Economicand Business.
In a report on the macro economy in the first quarterreleased on April 11, the VEPR research group noted that the daily reference exchangerate set by the State Bank maintained a rising trend since the beginning of thefourth quarter of 2018 to the end of the first quarter this year. At the end ofMarch, the rate was nearly 1 percent higher than the level one year ago, lowerthan the 1.4 percent yearly gain in the fourth quarter of 2018.
Meanwhile, the VND/USD exchange rateslisted at commercial banks stayed close to the ceiling rate in the trading bandof 3 percent. On March 31, the rate listed at commercial banks stood at 23,250VND per USD, up only marginally from the rate of 23,245 VND per USD in the fourthquarter last year.
Meanwhile, the inter-bank interestrate in the first quarter this year showed a rising trend, fluctuating between3.38 percent (in mid-January) to 5.6 percent (at the end of February andimmediately before the lunar New Year holidays). The report said the ratereached the quarter’s peak just before the lunar New Year holidays due tosurges in demand for short-term credit. The rate then dropped towards the endof the quarter to 3.32 percent. The rise in the inter-bank rates was attributedto the requirement for banks to ensure compulsory reserves and changes indeposits in major banks.
Director of the VEPR Nguyen DucThanh recommended that the top priority is to manage the forex rates in a flexibleway to cushion impacts from outside changes. Meanwhile, the interest rateshould be kept stable to facilitate enterprises’ access to the capital market.
Inflation in the first quarteralso showed an upward trend due to recent adjustments in the prices of electricityand petrol, the report said, adding that the impacts from those priceadjustments could last for many months, requiring the State Bank to be cautiousin managing money supply and credit.-VNA
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