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Economists say dollar price may make new records in 2012   2012-01-31 - VnMedia

Economists, who believe that the pressure for Vietnam to devaluate the dong to boost exports is not big in 2012, and think that the dollar price would increase by four percent in the year.


Though the forecast adjustments are lower than that in 2011, the dollar price would climb to record highs if the devaluation occurs.

Speaking at a workshop on the prospect of the national economy in 2012, Vu Viet Ngoan, Chair of the National Finance Supervision Council, said that he can seen many factors that support the dong/dollar exchange rate stabilization. Especially, Ngoan said, Vietnam hopes to obtain the payment balance surplus of three billion dollars.

He also thinks that Vietnam is not under a too hard pressure to devaluate the dong to boost exports. Therefore, he thinks the dong devaluation would be 4-5 percent only.

Sharing the same view, Dr Vo Tri Thanh, Deputy Head of the Central Institute for Economic Management CIEM, also said that in the economic conditions of 2012, the dollar price may increase by no more than four percent.

Meanwhile, Bui Kien Thanh, a well known economist, said it is really very difficult to say how high the dollar price should be, because the dong/dollar adjustments would much depend on many factors of the national economy. If Vietnam continues bearing the pressure from the high trade deficit, its foreign currency reserves would not increase.

Meanwhile, if Vietnam can successfully ease the trade deficit, the foreign currency reserves would increase. In this case, the dong would be more valuable against the dollar. This means that the dong/dollar exchange rate would be stabilized.

Also according to Thanh, in order to give exact predictions about the future of the dollar, it is necessary to consider the health of the economies in the world. If Vietnam’s national economy can perform well in 2012, it would not have to devaluate the local currency to encourage export. However, if businesses continue facing big difficulties and cannot develop strongly, the dollar would be even stronger.

The dong devaluation level in 2012 predicted by the State Bank of Vietnam is much lower than the levels forecast by economists.

Governor of the State Bank of Vietnam Nguyen Van Binh said that if no mishaps occur, the foreign currency market in 2012 would be very stable with the dollar price increase within 2-3 percent.

Binh has predicted that the general balance in 2012 would see a surplus of three billion dollars, which would be a supporting factor to the exchange rate stabilization.

“In 2011, Vietnam was warned that it would be very difficult to export products because the world’s market was narrowed. However, Vietnam still could boost exports and curb trade deficit. Why?” he questioned, and then answered: “It was because of the impacts of the monetary policies.”

Binh said that the credit policy alone could have positive influences. In 2011, the credit growth rate was 13 percent only, but the credit to fund export increased sharply by 58 percent and the credit for import was restricted.

“In 2011, if the gold price fluctuations had not occurred, the dong could have even appreciated,” Binh said.

In fact, in the period from April to August 2011, the State Bank continuously purchased foreign currencies. The central bank has been trying to control the purchase volume and the price so as to prevent the dong from appreciating too sharply

Binh has admitted that the risk for the foreign currency market is still existing, which comes from the gold market, while the gold price bears the influences from the world market. Therefore, Binh said, the State Bank would use necessary tools to stabilize the gold market and ease its impacts on the foreign currency market.

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