Vietnamese institutions and individuals deposited a net $14.2 billion in foreign currency overseas in 2015, according to calculations of Nguyen Xuan Thanh, director of the Fulbright Economics Teaching Program.
During the year, local credit institutions transferred a combined $4.63 billion abroad and “other sectors” $9.55 billion, Mr. Nguyen Xuan Thanh cited data of the State Bank of Vietnam (SBV
) as saying.
“Other sectors” include institutions and individuals in Vietnam that reside in Vietnam for more than one year, according to the International Monetary Fund (IMF).
In the third quarter (Q3) of 2015, credit institutions in Vietnam deposited $5.97 billion abroad and other sectors $2 billion. Meanwhile, $535 million flew into Vietnam in the quarter, resulting in a net outflow of $7.33 billion.
Source: Nguyen Xuan Thanh
The Vietnam Institute for Economic and Policy Research (VEPR
) earlier said in a report that the outward flow, mostly composed of overseas forex
deposits, soared to $7.3 billion while the figure was insignificant before.
Mr. Nguyen Xuan Thanh noted that this outflow means Vietnam’s short-lived assets and can be withdrawn at any time.
What Have Other Economists Said?
Expert Dinh Tuan Minh told the VietNamNet newspaper that the figures do not include deposits of credit institutions and individuals only, but also include other items such as commercial credits and advances.
Technically, the SBV must separate deposits and commercial credits, but the agency finds it impossible or inaccurate to separate them, thus putting them in the “money and deposits” account. Credit guarantees accounts for the large part of the $14.2 billion, he noted.
Nguyen Tu Anh, head of the Macroeconomic Policy Department under the Central Institute for Economic Management (CIEM), commented that a rise in overseas deposits indicates weak corporate demand for forex and banks experience a surplus of forex liquidity.
While the interest rate on forex deposits has been lowered to zero, domestic banks can optimize the forex holdings by depositing them abroad for profits. “This fact is not worrying at all,” he added.
Such Outflow is Normal: SBV
To Huy Vu, head of the SBV’s Forecast and Statistics Department, said in an interview filed on the SBV’s website that a surge in banks’ overseas forex deposits was normal in the context of rising forex hoarding at home following the strong devaluations of the Chinese yuan and the Fed’s interest rate hikes.
He confirmed that commercial banks deposited $5.9 billion abroad in Q3/2015.
“Banks are financial intermediate institutions. It’s totally normal that they increase deposits abroad when their needs at home decrease,” he stressed.