Vietnamese currency hits 2-year low against dollar
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Vietnamese banks on Monday traded the dong against the U.S. dollar at the lowest rate in two years as the greenback strengthens globally amid economic uncertainty. The Vietnamese dong declined by 0.3 percent from last weekend to VND23,510 per U.S. dollar at state-owned Vietcombank.
It fell by 0.34 percent at BIDV and 0.26 percent at Vietinbank, also state-owned lenders. Among private lenders, the currency is 0.21 percent weaker at Sacombank, and 0.17 percent weaker at Eximbank. The changes came after the State Bank of Vietnam on Monday let the Vietnamese dong slide by 0.04 percent against the greenback to VND23,121, the lowest this year.
It has been pumping more U.S. dollar into the market to reduce pressure on the exchange rate.
RongViet Securities estimates that the central bank has sold over $10 billion to the market this year, or around 10 percent of Vietnam’s foreign exchange reserves, to stabilize the market.
The U.S. Dollar Index has been hovering around a 20-year high mark since last month amid global economic uncertainty caused by the Russia-Ukraine crisis and supply chain disruptions due to China’s “zero-Covid” policy.
Concerns of global inflation has urged investors to buy more U.S. dollars as a safe-haven currency.
Questions & Answers
Q.What is the primary reason for the Vietnamese dong's recent decline against the U.S. Dollar?
What is the primary reason for the Vietnamese dong's recent decline against the U.S. Dollar?
The Vietnamese dong has declined as the greenback strengthens globally, driven by economic uncertainty. Investors are buying more U.S. Dollars as a safe-haven currency due to global inflation concerns, the Russia-Ukraine crisis, and China’s "zero-Covid" policy.
Q.How much U.S. Dollar has the State Bank of Vietnam sold this year to stabilise the market?
How much U.S. Dollar has the State Bank of Vietnam sold this year to stabilise the market?
RongViet Securities estimates that the central bank has sold over $10 billion to the market this year. This amounts to approximately 10 percent of Vietnam’s foreign exchange reserves, used to reduce pressure on the exchange rate.
Q.Which specific events are contributing to the global economic uncertainty mentioned in the article?
Which specific events are contributing to the global economic uncertainty mentioned in the article?
Global economic uncertainty is being caused by the Russia-Ukraine crisis and ongoing supply chain disruptions. These disruptions are primarily due to China’s "zero-Covid" policy, influencing investor behaviour and dollar strength.
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