Central bank adds to forex reserves

Central bank adds to forex reserves

The State Bank of Viet Nam (SBV) purchased roughly US$7.7 billion worth of foreign currency for the national foreign exchange reserve in the first quarter this year thanks to stable foreign exchange rates, SBV Governor Nguyen Van Binh said.

The purchase had enriched the national forex reserve, which was reported to be more than $30 billion at the end of last year, and would help stabilise the forex rate, he said.

However, Binh noted that increasing foreign exchange reserves put a large amount of pressure on the Vietnamese dong, because the goal was to inject money without causing inflation and foreign exchange rate fluctuations.

The exchange rate between the Vietnamese dong and the US dollar quoted at local commercial banks yesterday was stable at VND21,075-21,085 and VND21,115-21,125 to the dollar for bid and ask, respectively.

The interbank rate quoted at SBV transaction offices has remained unchanged at VND21,036 to the dollar from late June last year.

Binh said that in the first quarter of this year, monetary and gold markets were also stable.

He said that the monetary market had shown positive signs after nearly a month of interest rate cuts. Although the deposit interest rate for 1-6 month terms was cut to 6 per cent from 7 per cent last month, bank deposits had risen sharply. Lending rates for corresponding terms were also cut by 0.5-1 per cent, he said.

Binh added that lending in March was up 1 per cent month on month.

With increased lending in March, Binh said he was unconcerned about credit growth this year, adding that he expected the 12-14 per cent annual credit growth target to be achieved.

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