JavaScript is off. Please enable to view full site.

Vietnam looking at relaxing FX hedging curbs: official

Vietnam looking at relaxing FX hedging curbs: official

Friday, July 05, 2019, 09:06 GMT+7
Vietnam looking at relaxing FX hedging curbs: official
Vietnamese currency dong is seen at a bank in Hanoi November 25, 2009. Photo: Reuters

Vietnam is looking at relaxing restrictions on currency hedging tools and could start on a gradual path of changes in two to three years' time, a top official said on Thursday.

Vietnam clamped down on hedging tools such as FX forwards following currency stress in the financial crisis, but the lack of such instruments means companies or asset investors have little way of hedging their exposures.

“We have been discussing with the central bank how to create a (FX) hedging instrument,” Nguyen Duc Chi, the Chairman of Vietnam’s State Capital Investment Corporation, which is akin to a sovereign wealth fund, said at a conference in London.

“They (the central bank) are looking at it at the moment. My view is that in a 2-3 year timeframe you might start seeing some more relaxation in terms of (FX) hedging,” he said, adding it was also likely to be a gradual process.

Recent analysis by State Street Global Advisors estimated that while $300 million to $500 million equivalent worth of FX changed hands in the Vietnamese FX market a day, only around $20-30 million went on in the restricted forward market.

The dong has fallen roughly 10 percent against the U.S. dollar over the last four years, including a number of devaluations, which is one of the main reasons why international investors would prefer to have hedging options.

Vietnam’s central bank allows the dong to move in a band of 3% on either side of a daily ‘reference rate’, which is based on a basket of eight currencies. 

Reuters

More

Read more

;

Photos

VIDEOS

‘Taste of Australia’ gala dinner held in Ho Chi Minh City after 2-year hiatus

Taste of Australia Gala Reception has returned to the Park Hyatt Hotel in Ho Chi Minh City's District 1 after a two-year hiatus due to the COVID-19 pandemic

Vietnamese woman gives unconditional love to hundreds of adopted children

Despite her own immense hardship, she has taken in and cared for hundreds of orphans over the past three decades.

Vietnam’s Mekong Delta celebrates spring with ‘hat boi’ performances

The art form is so popular that it attracts people from all ages in the Mekong Delta

Vietnamese youngster travels back in time with clay miniatures

Each work is a scene caught by Dung and kept in his memories through his journeys across Vietnam

Latest news

India bans many single-use plastics to tackle waste

India imposed a ban on many single-use plastics on Friday in a bid to tackle waste choking rivers and poisoning wildlife, but experts say it faces severe headwinds from unprepared manufacturers and consumers unwilling to pay more