Foreign exchange reserves climbed to a record
(Updated at 9:37, 13/3/2018)
Successful capital sales for foreign investors have brought in large amounts of foreign currency which in turn have boosted national foreign exchange reserves to a record high level.
Since the end of February, the State Bank of Vietnam has several times adjusted the central rate with strong increases. However, the exchange rate on the market remained almost unchanged. According to experts, this is due to the abundant supply of foreign currency on the market.

Mr. Nguyen Duc Hung Linh, Director of Analysis and Investment Advisory for Individual clients of Saigon Securities Inc. (SSI) said that the speeding up of equitization and divestment of state-owned enterprises have brought in large amounts of foreign currency.

Specifically, foreign investment capital in the form of capital contribution and share purchase increased sharply (an increase of 45% over the same period), reaching USD 6.2 billion in 2017. In the first two months of 2018, this number continued to increase sharply (an increase of 102.5%), reaching USD 1.25 billion. Most notably, the sale of Sabeco shares at the end of 2017 helped collect about VND 110,000 billion for the budget, equivalent to USD 4.8 billion, creating a surge in foreign currency supply for the market.

In this regard, Deputy Governor of the State Bank of Vietnam Nguyen Thi Hong also affirmed that plans to sell capital of some credit institutions and state enterprises to foreign partners are actively supporting the exchange rate.

Apart from equitisation and some capital sales, the foreign exchange market and the exchange rate are also experiencing many advantages thanks to trade surplus, increased disbursement of foreign direct investment (FDI) as well as registered capital.
 
Only in the first two months of the year, FDI disbursement reached USD 1.7 billion. Trade balance in the first two months of the year also had a surplus of USD 1.08 billion. In addition, overseas remittances to Vietnam recovered strongly in 2017 after one year of decline, reaching a record value of USD 13.81 billion, an increase of 16%, bringing Vietnam into the top 10 countries with the largest remittances in the world.

“Excess foreign currency and stable exchange rates continue to enable the State Bank of Vietnam to buy more foreign currencies, increase foreign exchange reserves. Foreign exchange reserves increased rapidly from USD 41 billion at the end of 2016 to nearly USD 60 billion as of the end of February 2018, equivalent to 3 months (more than 13 weeks) of imports, higher than the minimum level recommended by the International Monetary Fund (IMF)”, said Linh.
 
 
Huong Nguyen
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