Vietnam’s foreign reserves hit 64 billion USD
Updated : Thursday, May 24, 2018 1:22 PM (GMT+0700)

Vietnam’sforeign reserves has increased by 130 percent to nearly 64 billion USD in thepast two-and-a-half years, Prime Minister Nguyen Xuan Phuc has said.

 
PM Nguyen Xuan Phuc was at a group meeting of the National Assembly on May 22 -
Photo chinhphu.vn

At a group meeting of the NationalAssembly on socio-economic affairs on May 22, PM Phuc said the exchangerate has been also stable and inflation has kept under control.

Experts attributed thestability to factors such as the State Bank of Vietnam (SBV)’s flexible centralrate management mechanism, which ensured that the domestic foreign exchangemarket was less affected by global factors.

In addition to this, thedomestic supply-demand relationship with the dollar was relatively stable,thanks to foreign currency supply from exports, foreign investment, officialdevelopment assistance, tourism and remittances.

The SBV affirmed it wouldcontinuously try to build up the country’s foreign reserves thisyear to cushion external shocks, besides supporting efforts to stabilisethe forex market.

Fitch Ratings recently alsoforecast that Vietnam’s foreign reserves would increase to about 66billion USD by the end of this year from 49 billion USD in 2017.

This year, the SBV haschanged its way of purchasing foreign currency. Instead of using spot trade,the central bank has used futures contracts for the purchase of hard currenciessince February 7 this year.

Previously, the bank used tobuy foreign currency in spot trade, with volumes reaching 1-3 billion USD perday, meaning that an equivalent volume of Vietnamese dong was pumped into themarket in a short time.

But since February, the bankhas launched three-month futures contracts to regulate the flow of currency ina more flexible way. Some 40 percent of the foreign reserves has been purchasedthrough futures contracts, helping to balance cash flows to moderate thepressures on interest rates, USD/VND exchange rate and inflation.

Source:VNA

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