Vietnam's record high forex reserves help ensure economic stability: SBV governor

Vietnam’s foreign exchange reserves now stand at a record high of US$84 billion, enabling the government to ensure macro-economic stability, according to the Governor of the State Bank of Vietnam (SBV) Le Minh Hung.

SBV Governor Le Minh Hung at the online conference. Source: SBV.

“The SBV and the banking system have sufficient capacity and necessary instrument to stabilize the foreign exchange market and the exchange rate policy,” Hung said at a government online conference on April 10.

“Since the beginning of the year, the SBV has not intervened in the forex market, but we are ready to do so in case of necessity,“ Hung continued.

In the first quarter, the Vietnamese dong (VND) devaluated by 1.3 – 1.5% against the US dollar amid strong fluctuations of other currencies in the region and all over the world, Hung said, adding the country's forex market operates as normal with strong liquidity to meet market demand.

Hung said the banking system has strictly followed the instruction of the government in managing the monetary policy, aiming to control inflation and ensure macro-economic stability.

More importantly, banks are providing support to the business community and individuals affected by the Covid-19 pandemic.

According to Hung, efforts to stabilize the marco-economy, control inflation and manage the exchange rate over the recent years are key to enhance economic resilience.

Hung referred to foreign experts’ assessment that without a strong macroeconomic base, the impacts of the Covid-19 pandemic on Vietnam would be larger.

Meanwhile, effective measures in controlling inflation also play an essential part in mitigating negative impacts on people’s lives, said Hung.

These are the foundation for Vietnam to enjoy a strong recovery in the post-pandemic period, Hung stressed.

“The SBV would continue to focus on managing the monetary policy in a flexible and proactive manner to solidify the macro-economic foundation,” Hung added.

He informed that as of March 31, credit growth of the banking system stood at 1.3% against early 2020, which is a positive sign as the growth was flat in the first two months of 2020.

It is predicted credit institutions would inject VND900 – 1,100 trillion (US$38.59 – 47.17 billion) into the economy this year, translating into a credit growth of 11 – 14%.

The SBV is committed to ensuring liquidity for the banking system in any circumstance, the governor affirmed.

Strong measures to support business community

Hung informed commercial banks have agreed to further reduce an additional two percentage points in interest rates for both existing and new loans.

To date, the monetary aid package in forms of simplification of lending procedures, rescheduling of debt payment, lowering and waiving of interest rates for customers affected by the Covid-19 epidemic has been expanded to more than VND300 trillion (US$12.73 billion) from the previous VND250 trillion (US$10.86 billion).

This included VND126.5 trillion (US$5.42 billion) in waiving and reducing of interest rates, new loans with preferential rates of VND180 trillion (US$7.71 billion) and restructuring debt payment worth VND18 trillion (US$771.86 million).

The SBV estimated outstanding loans affected by the pandemic at nearly VND2,000 trillion (US$85.76 billion), or 23% of total existing loans.

Hung said the SBV continues to ensure provision of sufficient capital for the economy at low interest rates and closely monitors financial markets for appropriate adjustment in management.