China has no significant influence on the Vietnamese finance market, and the dong/dollar exchange rate will remain stable, an official of the State Bank of Vietnam (SBV) has said.
“Chinese banks in Vietnam are very small banks compared with Vietnamese commercial banks and they don’t have any considerable influence on Vietnamese businesses,” said Dao Quoc Tinh, Deputy Chief Inspector of the State Bank, said at a workshop held by the National Finance Supervisory Council late last week.
“The amount of foreign currencies they lend are also very modest,” he added.
Tinh went on to say that SBV, at a working session with the International Monetary Fund (IMF) on June 11 affirmed that Vietnam’s foreign exchange reserves have reached $36 billion, a record high.
“With all of these factors, we can say for sure that the dong/dollar exchange rate will be stable, as committed by the State Bank’s Governor,” he said.
There are nearly 60 foreign bank branches operating in Vietnam. These include a Chinese bank branch and a Chinese representative office in Hanoi.
Tinh cited figures to express his disagreement with Nguyen Minh Phong, a well-known economist, who said there may be a “war of nerves” that makes the economy sink.
Phong warned that the consequences would be very serious if China lends big money (in foreign currencies) to Vietnam through the banking system and then withdraws the money in great amounts, while spreading rumors that there is a wave of foreign currency collection.
A scholar at the Central Institute for Economic Management (CIEM) told Thoi bao Kinh te Saigon that Vietnam’s economy could be undermined with cash, gold flow and counterfeit money. He also suggested that Vietnamese agencies should keep closer watch over the four most important sectors – trade, investment, service and finance.
Governor of the State Bank of Vietnam spoke recently before the public, reassuring people that the dong/dollar exchange rate will be stabilized. He affirmed that the State Bank will itself decide whether to adjust the exchange rate, and in this case, the dong devaluation will be no higher than two percent.
Dau tu chung khoan has quoted a report of Vietcombank Securities as saying that some big enterprises unexpectedly withdrew their money in foreign currencies from banks in early June, which is the main reason behind the dollar price surge.
However, the company’s analysts believe that there will be no exchange rate adjustment, at least in the second quarter.
The dollar price quoted by commercial banks once hit a high peak of VND21,246 per dollar. The dollar price in the black market at the same time also rose sharply to VND21,300 per dollar, which was attributed to East Sea problems. Individuals rushed to buy dollar and gold to preserve their assets in case of East Sea tension escalations.
However, the analysts believe that the dollar demand increase will last a short time, which will not have significant influence on the foreign exchange market. Meanwhile, the dollar supply is abundant at this moment with foreign direct investment (FDI) expected to reach $4.6 billion.