15:54 | 25/02/2016 Economy
(VEN) - The State Bank of Vietnam’s exchange rate policy this year is considered as a major step forward in stabilizing the market in a more flexible manner, allowing it to make more rapid responses to drastic changes in the world and the requirements set in international agreements to be concluded in the near future.
The new exchange rate policy fully reflects any changes in both global and domestic markets
Economists forecast that the exchange rate between the Vietnamese dong and the US dollar could increase by four percent by the end of this year.
According to the State Bank of Vietnam’s Money Policy Department Director Bui Quoc Dung, the exchange rate stabilization policy which has been in place from the last six months of 2011 to the end of 2015 helped stabilize the macro economy, peg inflation, improve the trade balance and increase foreign reserves.
As for this year, the State Bank has changed its management of the exchange rate in a more flexible manner as a further step to prevent dollarization, improve the position of the Vietnamese dong, stabilize the exchange rate and the foreign exchange market and adapt to changes in global and domestic markets.
Bui Quoc Dung also said that changes in the global market have notably affected the exchange rate and the foreign currency market in Vietnam.
The global market is likely to undergo major changes affecting the Vietnamese market such as the possibility the Fed may quadruple interest rates, while the Chinese yuan will likely show unpredictable changes. Meanwhile, Vietnam has more deeply integrated into the global economy via a series of free trade agreements.
In cases where the exchange rate between the Vietnamese dong and the US dollar closely follows changes worldwide, it will be able to minimize external shocks to the domestic forex market and unfavorable impacts on foreign loans and investments.
Increasing around 4-5 percent
Economists forecast that the dong/dollar exchange rate could increase by 4-5 percent this year.
Maritime Bank Economic Research Center Director Trinh Quang Anh said that the new exchange rate policy is flexible and is market-based as it fully reflects any changes in both global and domestic markets.
LienVietPostBank Management Board Deputy Standing Chairman Nguyen Duc Huong said that the global market would change and that it is difficult to accurately forecast the increase in the exchange rate this year.
He also said that the State Bank would let the exchange rate float under control in consideration of the real situation every day and even every hour, rather than based on fixed plans like in the previous years. He forecast that the exchange rate would not increase by more than one percent each quarter and would likely drop in one or more quarters.
Dr Le Xuan Nghia:
The new exchange rate policy does not represent much change from the previous mechanism and is more flexible and predictable.