The Vietnamese government recently reported that its foreign exchange reserves surged US$12 billion to a record high of $92 billion after the first eight months of 2020 and are expected to reach $100 billion by the end of the year.
Vietnam's forex reserves have been on a steady rise in recent years from $51.5 billion at the end of 2017 to $92 billion as of August 2020, an increase of $40.5 billion in less than three years.
Estimated figures from the General Department of Vietnam Customs showed a trade surplus of $2.5 billion in August, resulting in the accumulated trade surplus totaling $10.93 billion in January-August.
This robust supply helped contribute to the State Bank of Vietnam’s steady purchase of foreign currencies in the first months of the year.
The dollar exchange rate has thus remained stable at local commercial banks over the past two months despite fluctuations in gold prices.
State-owned lender Vietcombank in July and August quoted the highest dollar selling and buying rates at VND23,270 and VND23,060, respectively.
The rates at private lender Eximbank were at VND23,250 and VND23,080, respectively.
The dollar was recently under pressure to depreciate against other currencies while August was the peak month of Vietnam’s exports, leading to stable supply and demand of the foreign currency in Vietnam, according to the SSI Securities Corporation.
The USD-VND exchange rate is therefore forecast to remain largely stable in the coming period.
The BIDV Training and Research Institute had quoted the interbank exchange rate of the greenback at VND23,175 by the end of August, a slight increase of 0.01 percent against the beginning of this year.
Meanwhile, the reference exchange rate of the central bank increased 0.19 percent over the same period.
Given the growing forex reserves together with favorable foreign currency supply and demand, the exchange rate is expected to rise 0.5-1 percent by the end of the year, compared to the beginning, hovering between VND23,288 and VND23,515.