SSI Research: increasing remittances at the end of the year will help stabilize the exchange rate
In the money market report, SSI Securities Analysis Center - SSI Research mentioned that the positive economic data in the past week underpinned the recovery of the US economy and raised expectations that the Fed might scale back its asset purchases sooner.
US CPI data in August cooled down when it only increased by 5.3% over the same period, of which the core CPI increased by 4.0%, lower than the forecast of 5.4% and 4.2% respectively. This adds to the Fed's view that inflation is temporary. Besides, the US retail sales information announced on September 16 also showed a positive signal, when it increased by 0.8% compared to the previous month and in stark contrast to the expectation of a decrease of -0.8% in the context that the pandemic is still with complicated developments.
This boosted the USD and US government bond yields while the world gold price fell sharply. At the end of the week, gold price 1.85% compared with the end of last week, while the dollar increased by 0.66%. Most major currencies depreciated against USD, e.g. EUR -0.75%, GBP -0.71%, CAD -0.57%.
In Vietnam, the USD/VND exchange rate listed at commercial banks moved sideways last week, ending the week at 22,640/22,870. The domestic gold price had a relatively strong correction, dropping by up to 1.1% in the context of a sharp drop in the world gold price (-1.8%). This helped the world-domestic gold price difference to cool down somewhat and the exchange rate was free to adjust slightly, ending the week at 23,045/23,190.
The trade balance in August maintained a trade deficit of more than USD 100 million, but it was more positive than the estimate from the General Statistics Office (USD -1.3 billion), showing that production activities were partly restored in second half of August.
The government is now gradually reopening the economy, therefore SSI Research expects the trade balance to improve at the end of the year when remittance flows will usually increase sharply at the end of the year. Supply and demand of foreign currency in the market will be relatively balanced and help USD/VND exchange rate maintain a stable state.
- Governor: Will increase credit limit for banks
- BVSC: Credit demand may increase, the State Bank would provide more room extension
- SSI Research: increasing remittances at the end of the year will help stabilize the exchange rate
- SBV: Directing credit flows to manufacturing and priority sectors
- The State Bank of Vietnam extends the debt restructuring period for another 6 months
- SSI: Credit growth in August will not be too positive
- Eight months, credit increased by 7.4%
- In the first 7 months of the year, Ho Chi Minh City credit grew by 5.9%
- Credit flows strongly into industrial zones
- The SBV may continue to cut policy interest rates if GDP growth is negative in the third quarter