Hanoi-based businessman Do The Dang said that the dong’s depreciation against foreign currencies may be more to do with the arrest and investigation of some key figures of the Van Thinh Phat Group. Muoi said holding dollars is not profitable considering commercial banks are offering up to 7.5% annual interest rates for local currency savings, more than matching inflation. He forecast that the exchange rate will not increase sharply in the near future. Nguyen Pham Muoi, a former reporter for Wall Street Journal publisher Dow Jones, said Vietnam is controlling the exchange rate and inflation well and the State Bank of Vietnam is doing what is needed to protect the Vietnamese dong and macroeconomic stability. Also, with inflation rates rising around the world people’s purchasing power has decreased, giving them less to spend on imported goods. The Dau Tu Newspaper reported that Vietnam’s main exports of seafood, textiles, and agricultural products go mainly to Europe, Asia and South America, not the U.S. Some say the dong’s depreciation against the dollar may not give much of a boost to exporters. On the other hand, the lecturer said imported goods will cost more and may be harder to sell and Vietnamese traveling abroad will find their money won’t go as far as it used to.
“Vietnam relies heavily on exports, so overall doesn't have too much of an impact on the Vietnamese economy,” he said. However, according to Nguyen Quang A, the recent increase in the exchange rate band between the dollar and the dong by the State Bank of Vietnam from 3% to 5% and the current increase in the value of foreign currencies will have a limited impact. Since the beginning of this month Vietnam’s State Bank has pumped nearly VND120 trillion (U.S.$4.9 billion) into the market, reducing the annual interest rate to 5% in recent days, according to the VietNamNet online news site. In fact, there are already signs of an increase in cash issuance," said National Economics University lecturer Chu Hong Quy, adding that when the dong depreciates, issuing more Vietnamese currency will hurt the entire population. “The increase in the USD/VND exchange rate will make the public debt in VND larger and to make up for the shortfall, the Vietnamese government will issue more cash. The target of Vietnam’s direct debt repayment obligations compared to State budget revenue is expected to be about 22-23%. The ministry said that by the end of this year, public debt will account for about 45-46% of gross domestic product (GDP), government debt will be about 41-42% of GDP and the country's external debt will be about 40-41% of GDP. The Ministry of Finance sent a report to the Prime Minister in March saying the government will have to repay more than VND1,000 trillion (U.S.$ 40.7 billion) of public debt from 2022 to 2024. “Vietnam's foreign debt payable in USD, in terms of dong, will increase and this will increase the burden on repaying the principal and interest on the national debt.
Nguyen Quang A, co-founder and former member of the board of directors of Vietnam Prosperity Bank, said the dollar’s rise against the dong will have a significant impact on the country’s public debt repayment obligations.
#VIETNAMESE EXCHANGE RATE FREE#
On the free currency market in Hanoi the dollar’s buy and sell rates were around VND24,662 for buying and VND24,722 for selling. That is an increase of VND90 for buying and VND320 for selling compared with the previous listed levels. dollar (USD) rise sharply against the Vietnamese dong (VND) compared with the previous session, according to the Economic and Urban newspaper.Īt 9:20 a.m., Vietcombank listed the buying price of dollars at VND24,240 and the selling price at VND24,550. The State Bank of Vietnam announced a ceiling rate of VND24,846 for one U.S. dollar’s rise against its Asian counterparts is making it harder for the region to repay dollar denominated debt and Vietnam is no exception.
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