rate is unlikely to undergo strong volatility in the upcoming time as the State Bank of Vietnam (SBV) keeps close watch and stands ready to make interventions if necessary after the Fed lifted interest rates for the second time in nearly a decade, an HSBC
executive has said.
The Vietnamese dong (VND) is under high devaluation pressure as many Asian currencies have lost value against the greenback over the past month after Donald Trump won the presidential election, Ngo Dang Khoa, head of forex
and bond division at HSBC Vietnam, said in a note late on Thursday.
In addition, Vietnam has returned to post trade deficits, with a total value of $700 million in the last two months.
After the Fed announced the first interest rate lift this year, the USD/VND weakened to 22,740-22,750 on Thursday morning and further rose to 22,775 at Vietcombank on Friday.
Market sentiment was cautious and transactions were moderate after the rate hike, Khoa observed.
Given the low volume of VND-denominated government bond holdings by foreign investors, Vietnam has fortunately not witnessed selloffs of bonds and purchase of foreign currency at levels seen at several regional countries, he noted.
To keep the local forex market steady, the HSBC executive suggested the SBV maintain proper interest rate for the dong, and remain committed to selling forex to support market liquidity.
Further, the divestment of state holdings in a number of enterprises adds supply of USD and helps balance the supply-demand in the forex market, Khoa said.