State Bank will sell USD at lower price to intervene in the market
In response to the sharp increase in exchange rates from the morning to the afternoon of July 2, Mr. Pham Thanh Ha, Director of the Monetary Policy Department, State Bank of Vietnam (SBV), said that this agency is closely monitoring market developments and is ready to sell foreign currency at a lower price than banks to intervene.
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| USD price is on a strong upward trend |
Sir, how do you evaluate the exchange rate and foreign exchange market in the first 6 months of the year?
Mr. Pham Thanh Ha:The exchange rate and foreign exchange market in the first 5 months of the year were relatively stable thanks to many favorable factors in the domestic and international markets such as a surplus trade balance, high disbursement of FDI; a number of capital sale deals attracting a large amount of FII capital into Vietnam; and the world USD Index fluctuated little. In the context of abundant foreign currency supply, the State Bank of Vietnam was able to buy a large amount of foreign currency to increase foreign exchange reserves, contributing to strengthening national financial and monetary security and increasing the ability to intervene in the foreign exchange market when necessary.
Since the end of May, there have been some days when the exchange rate has increased quite rapidly, however, market liquidity has remained stable, foreign currency status has remained positive, foreign currency transactions have been smooth, and all legitimate foreign currency purchasing needs of the economy have been fully and promptly met.
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| Mr. Pham Thanh Ha, Director of Monetary Policy Department, State Bank of Vietnam. |
Could you please tell me the reason for the recent increase in exchange rates?
Mr. Pham Thanh Ha:From June 18 to now, the exchange rate has been increasing, by July 2 it was about 1.2% higher than at the end of 2017. The increase in exchange rate in recent days is mainly due to the following reasons:Tfirst, USD interest rates on the interbank market (IB) increased following the upward trend of world interest rates while VND IB interest rates remained low, causing the VND-USD interest rate gap to increase to a negative level.
Monday, some domestic and foreign factors affect market psychology such as: Domestic stock market has some sessions of strong decline, USD price increases in the world market.
Could you please tell us about the direction of the State Bank in the coming time?
Mr. Pham Thanh Ha:In the coming time, the SBV will continue to closely monitor domestic and foreign market developments, pay attention to the roadmap and impact of the US Federal Reserve's (Fed) interest rate hike and its impact, the trade relationship between the US and China, the actions of the European Central Bank and the Bank of Japan, as well as the domestic foreign currency supply and demand situation to flexibly and appropriately manage the central exchange rate. The SBV will continue to synchronously use other monetary policy measures and tools, and is ready to sell foreign currency to intervene in the market. If necessary, the SBV will sell foreign currency at a lower exchange rate than the current listed exchange rate to stabilize the market, contributing to macroeconomic stability.
