10:58 | 16/12/2016 Finance - Banking
(VEN) - The National Financial Supervisory Commission (NFSC) announced 10-month economic report. Accordingly, capital supply to the economy maintained good situation thanks to abundant liquidity and economic recovery. The credit growth target of 18-20 percent this year tends to be attainable, while the domestic foreign exchange market is forecasted to be stable in the remaining months of the year.
According to the NFSC, the domestic foreign exchange market showed positive signs. The central exchange rate was adjusted to increase and stood at VND22,030 per dollar in late October, an increase of 0.6 percent compared to the beginning of the year. Exchange rate in many commercial banks and unofficial market maintained stabilization, listing at VND22,330-VND22,350 per dollar. In addition, the credit default swap (CDS) slightly fell, while non-deliverable forwards (NDF) saw little changes.
The stability of the domestic foreign exchange market was supported by the devaluation of some key currencies compared to the US dollar, especially the Chinese yuan and the British pound. The British pound hit a new 31-year low against the US dollar, while the Chinese yuan fell to a six-year low compared to the US dollar.
Demand on foreign currencies could increase in the remaining months of the year, reflecting through an increase in import turnover since September 2016. In addition, credit in foreign currencies increased by 5.44 percent by the end of the third quarter of the year compared to the end of 2015. However, with abundant supplies of foreign currencies such as US$2.77 billion in trade surplus and US$11.02 billion in nine-month FDI, the domestic foreign exchange market will face no pressure in the last two months of the year. Moreover, countries have continuously implemented programs on stimulating economic growth and loosened their monetary policy.
At the government’s regular meeting in October 2016, the prime minister asked the State Bank of Vietnam to ensure stability of exchange rate and liquidity in the banking system, especially in the end of the year. The State Bank of Vietnam was required to flexibly operate monetary policy to create favorable conditions for businesses in credit access with reasonable interest rates, strictly control credit quality and closely monitor developments of bad debts as well as control core inflation and urgently complete the projects on restructuring credit institutions and handing bad debts during the 2016-2020 period.
The domestic foreign exchange market will face no pressure in the remaining months of the year thanks to abundant supplies of foreign currencies.