The State Bank of Vietnam decided to adjust the exchange rate band from +/-1% to +/-2% applicable from August 12, 2015. With the average inter-bank VND/USD exchange of 21,673, the ceiling VND/USD exchange rate is 22,106 and the floor rate is 21,240.
Basing on the analysis and forecast of macro balances from ministries and agencies right from early 2015, the SBV set out the margin of the VND/USD exchange rate not to exceed 2%. In the first 6 months of 2015, the SBV adjusted the VND/USD exchange rate from 21,246 to 21,458 (by +1%) on January 7, 2015, and to 21,673 (by +1%) on May 7, 2015 for the aim of proactively regulating the market in accordance with the situations in the domestic and international financial market movement. Therefore, the domestic forex market was stable and the legitimate demand for foreign currencies from enterprises and individuals was met promptly.
From the beginning of the year, there have been unexpected developments in the international markets: (i) the oil price reduced to the lowest level due to supply and demand relationship, but the main reason were political factors; (ii) the combination of Fed’s anticipation of interest rate raising and the deterioration in the European economy and the economic crisis in Greece pushed the USD rising much higher than the expectation of the Fed. On the basis of the analysis and forecast of macro-economic situations, the SBV continued to conduct measures of stabilizing the VND/USD exchange rate in line with the orientation set out from the beginning of the year. However, a fall of CNY by 1.9 percent on August 11, 2015, which is seen as the biggest decrease over the past two decades, led to a lowering of several Asian key currencies and price indicators in the international market. With the fact that China is a large trade partner of Vietnam, an adjustment of CNY/USD exchange rate will inevitably put an adverse impact on Vietnam's economy.
Therefore, in order to proactively and flexibly react to the negative impacts of the international market and ensure the competitiveness of Vietnam’s goods, the SBV issued Decision No. 1595/QĐ-NHNN on August 11 to stipulate the VND/USD spot exchange rate. Accordingly, the VND/USD exchange rate band was adjusted from +/-1% to +/-2%. With the average inter-bank VND/USD exchange rate of 21,673, the ceiling VND/USD exchange rate is 22,106 and the floor rate is 21,240.
In the coming time, the SBV will consistently conduct measures and monetary policy tools in order to continue stabilizing exchange rate and forex market in line with the set band, and closely monitor the developments in the domestic and international markets and forecast of macro-economic developments for effective management of monetary policy and banking operations.
TLH