The flow of remittances and FDI disbursement is still quite positive, enough to make up for the deficit in the balance of trade in goods; foreign currency credit also increased, therefore foreign currency supply and demand remained quite balanced. Forecasting for the second half of the year, experts believe that the USD/VND exchange rate will remain stable in the long term but may fluctuate according to the movements of the USD in the international market in the short term.

The data presented in the Money Market Report for the week from June 28 to July 2 just published by SSI Securities Analysis Division (SSI Research) shows that the the listed USD/VND exchange rate of commercial banks in the past week increased by 20 VND/USD in the buying direction and decreased by 10 VND/USD in the selling direction, thereby listing at 22,900 - 23,100 VND/USD; the difference between the selling rate - the buying rate decreased to 200 VND/USD - the lowest level since March 2020.

In the past week, the exchange rate on the free market increased by 20 VND/USD for buying and 40 VND/USD for selling, to 23,300 - 23,350 VND/USD.

With the current development, experts of SSI Research said that in the first 6 months of 2021, VND appreciated by 0.4% against USD while most regional currencies depreciated (THB -6,9%; INR –1,7%; SGD -1,8%; PHP-1,6%, etc.).

According to the General Statistics Office, in the first 6 months of this year, the total export and import turnover of goods reached USD 316.73 billion, an increase of 32.2% over the same period last year. In which, exports reached USD 157.63 billion, an increase of 28.4%; imports reached USD 159.1 billion, an increase of 36.1%. Trade balance in the first six months of 2021 is estimated to have a trade deficit of USD 1.47 billion.

According to the General Statistics Office, recently, the Yuan (CNY) has increased strongly against the dollar, making imports from this market also under increased pressure. In addition, the sharp increase in world commodity prices during the past time, while Vietnam's economy is still heavily dependent on the import of input materials, is also the reason for the sharp increase in the value of Vietnam's imports.

Despite the trade deficit in the first half of 2021, SSI experts believe that, with the flow of remittances and disbursement of foreign direct investment (FDI) still quite positive, it should be enough to make up for the trade balance deficit. Foreign currency credit also increased, so foreign currency supply and demand remained quite balanced.

Meanwhile, experts of Mirea Asset Securities Company expect the exchange rate to remain relatively stable thanks to factors such as: The expectation that the trade balance will gradually return to surplus when exports accelerate again; FDI inflows continue to be positive thanks to the wave of global production shifting; flexible foreign currency supply and demand regulation mechanism of the State Bank of Vietnam; the USD is not expected to strengthen due to the large-scale economic stimulus packages and the Fed's policy to support the economy. In mid-April 2021, the US Department of Finance removed Vietnam from the list of currency manipulators, which will reduce pressure on the USD/VND exchange rate.

Kylie Nguyen