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VND/US$ exchange rate to remain stable amid crisis   2008-10-02 - NLD

Foreign currency prices have not been greatly affected by the world’s financial crisis. The greenback value has been staying firm, while experts believe that the currency will not weaken.


The news about the rejection of the $700bil bailout by the US House of Representative and about the pumping of hundreds of billions of dollars into financial markets by central banks has raised the concern that the greenback will weaken. However, the greenback has been standing steady against major currencies.


In the world market, one euro was converted to $1.41 on October 1, while the exchange rate was Euro1/$1.43 on September 30. In Vietnam, Vietcombank HCM City branch quoted the sale price of VND16,620/US$1 on October 1. In the black market, the dollar was sold at VND16,560/US$1 on the same day, a decrease of VND20/US$1 over the previous day.


Prior to that, after the news about the troubled Lehman Brothers and AIG, the US$/VND exchange rate increased slightly. The rate climbed to VND16,740/US$1 in mid September.


There is no sign of a possible foreign currency shortage in the near future. Vietnam’s trade deficit has been less than $1bil in each of the last three months, while the figure was just $500mil in September. The trade deficit can be offset by the increasing overseas remittance and deposits in foreign currencies, which have increased by 35%. Bankers have committed to provide enough foreign currencies for companies to serve the import of essential commodities.


Many governments in the world are trying to rescue financial markets by pumping money in. Analysts say that European banks may become the next victims of the US financial crisis. The German government and some of the country’s banks have decided to provide Euro35bil (US$50bil) to rescue Hypro Group, while the Russian central bank has also decided to pour $50bil into its financial market. The UK government will take over Bradford & Bingley, putting hard pressure on the euro.


Nguoi lao dong newspaper quoted John Kyriakopoulos, strategist from NAB Capital, as saying that the greenback value would be supported by the said financial rescue programmes.


Huynh Buu Quang, Corporate Director of Hong Kong and Shanghai Banking Corporation in Vietnam, also said that the possibility of a weak dollar is becoming more unlikely as the crisis in Europe is forcing the euro’s value down.


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