The 32nd-week bond newsletter of 2020 announced by Bao Viet Securities Company (BVSC) reported that in the past week (from August 10-14), the State Bank of Vietnam (SBV) did not operate net injecting/withdrawing in the open market. According to some sources, SBV had bought in nearly $ 2 billion in recent weeks. This meant that more than 40 trillion dong was injected into the market by SBV. Meanwhile, SBV did not have any move to net absorb capital through T-bills. Therefore, the liquidity in the system continued to be abundant.
BVSC believed that in order to create a stable ground for liquidity, thereby creating conditions for commercial banks to cut lending rates, SBV might continue not to intervene in the open market in the short term.
Previously, the SBV’s purchase of foreign currency was mentioned by many other sources. Some sources even said that in just over a week, the State Bank provided more than 40 trillion dong to buy foreign currency.
The SBV’s move to buy foreign currencies was understandable given the stable exchange rate for many months and the abundant supply of foreign currencies (due to the demand for foreign currency to serve import and export decrease in the Covid-19 epidemic). Even buying in also helped stop the falling of the exchange rate when the dollar on the world market had continuously decreased over time.
According to BVSC, the SBV’s purchase of foreign reserves was to improve foreign exchange reserves, and the buying news of nearly $ 2 billion was basis when the exchange rate at commercial banks continuously reached the buying threshold. SBV’s exchange rate of 21,175 dong per US dollar was even lower, and the trade surplus reached over $ 8 billion in the first seven months of the year. According to BVSC’s forecasts, the dong might depreciate by no more than one percent against the US dollar in 2020.
