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Vietnam Central Bank Reiterates Dollar Sale Plan to Support Dong - BLOOMBERG

MAY 26, 2024

BY  Nguyen Kieu GiangBloomberg News

(Bloomberg) -- Vietnam’s monetary authority reiterated its plan to keep selling dollars to some banks as a way of intervening in the foreign exchange market to support the local currency, which has fallen to a record low.

The State Bank of Vietnam said it will manage the exchange rate flexibly and in accordance with market developments through monetary policy tools, and with the sale of dollars, according to a statement on the regulator’s website.

The Vietnamese dong fell to a record low of 25,470 per dollar this week and has lost nearly 5% in 2024. The central bank last month sold dollars at the “intervening price” of 25,450 dong per dollar. 

The regulator also raised the reverse repurchase rate to 4.5% this week, delivering its second quarter-point hike in the past month in moves seen as efforts to stabilize the dong.

The central bank said the foreign exchange market has been under pressure from “unpredictable fluctuations” globally, combined with domestic challenges and difficulties. Still, it expects the supply of dollars to increase due to an export recovery, it added. 

The likelihood that the US Federal Reserve may cut interest rates by the end of this year will also reduce devaluation pressures on the dong, according to the statement, which cited monetary policy head Pham Chi Quang. 

Quang also ruled out recent market speculation about possible changes in the central bank’s exchange rate policy and urged caution when dealing with rumors.


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