ACBS believes that the State Bank can raise the policy interest rate by 0.5 percentage points by the end of 2022 and by 1-2 percentage points in 2023. Interbank interest rates may increase by 0.5-1 percentage points in the last month of 2022.

According to the updated report of ACB Securities (ACBS), experts expect the key policy interest rate to gradually increase by 0.5 percentage points by the end of 2022 and increase by 1-2 percentage points in 2023.

Regarding the interbank interest rate, experts believe that the liquidity of the banking system will remain at the current level to support VND from the State Bank of Vietnam (SBV). Therefore, according to ACBS, it is expected that interbank interest rates may increase by 0.5-1 percentage points in the last month of 2022.

Besides, ACBS also expects the SBV will continue to maintain a positive interbank VND and USD interest rate differential to support the VND/USD exchange rate. Therefore, with the US Federal Reserve's (Fed) policy interest rates continuing to be higher towards the end of the year, experts do not expect the SBV to lower interbank interest rates much in the coming months.

Regarding exchange rate, ACBS believes that the devaluation pressure of VND in 2023 is expected to be low due to many reasons.

Firstly, the recent weakening of the USD has contributed to the strengthening of the VND, therefore ACBS forecasts this trend may continue as the Fed is expected to slow down the rate of interest rate hikes in 2023 and possibly may stop raising interest rates in the second half of 2023.

Secondly, remittances to Ho Chi Minh City are expected to reach USD 6.8 billion in 2022 (an increase from USD 6.5 billion in 2021).

Besides, disbursed FDI is expected to continue to grow strongly when FDI disbursement in the first 11 months of 2022 increased by 15.1% over the same period, reaching USD 19.7 billion.

In addition, in the context of the Fed's forecast that the US GDP growth rate in 2023 will continue to increase by 0.5% in 2023, the export activity of Vietnam, one of the main sources of USD, may still be positive in 2023, although growth may slow.

The last reason is that the SBV re-listed the USD buying rate (which is the rate at which the SBV buys USD from commercial banks). This is a positive news for the liquidity of the banking system. This move signals that the SBV will start buying back foreign currencies from commercial banks with positive foreign currency positions.

Kylie Nguyen