Central bank committed to keeping exchange rate stable

State Bank of Vietnam (SBV) Deputy Governor Nguyen Thi Hong has said the central bank has no plans to adjust the exchange rate for now, adding that there is no need to worry about recent developments on the foreign exchange market.

Hong said on March 25 that although the US dollar has risen against the Vietnamese dong, it was still far below the ceiling set by the central bank and the currency market was still in normal operation.

Last January, the SBV devalued the Vietnamese dong by 1% from VND21,246 to VND21,458 per US dollar, the first exchange rate adjustment since June 2013.

Deputy Governor Hong reiterated that the foreign exchange rate will be adjusted by no more than 2% in 2015, a pledge made by Governor Nguyen Van Binh in December last year.

According to the central bank official, over the past week the greenback has only risen strongly against key currencies such as the euro, British pound and Canadian dollar, with which Vietnam’s trade is not very large.

She added that keeping the exchange rate unchanged at the moment is more beneficial than devaluing the Vietnamese dong because 90% of materials for Vietnam’s exports are purchased from abroad.

Therefore an increase in the value of the US dollar will hurt exporters since input costs will escalate, especially as the demand for imported materials is rising, deputy governor Hong explained.

According to the deputy governor, despite posting a trade deficit of US$1.75 billion in the first three months of 2015, the Vietnamese economy still enjoyed a balance of payments surplus of US$2.8 billion thanks to funds from remittances and foreign investment capital.

(Source: nhandan.org.vn)