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| Bidv predicts forex rate at 18,200-18,300 dong/US dollar by year end |
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26/May/2009 Intellasia | CafeF |
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26 May, 2009 - 12:36:28 PM |
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With the foreign currency reserve of $20 billion, the forex rate by the year end could be 18,200-18,300 dong per US dollar, citing the information reported yesterday by Bank for Investment and Development of Vietnam (Bidv).
According to the bank’s independent research group, in the first four months of 2009, the forex rate showed strong movements. The group considered macro-economic factors, foreign money flow, and speculation factor to release the prediction.
Regarding the macro-economic factor, Vietnam’s Q1 economic growth reached 3.1 percent year on year whilst the CPI surged 1.68 percent from the last year end and 9.4 percent compared with the same period of 2008. The trade surplus continuously rose in first three months before April’s trade deficit of $700 million, bringing the trade surplus of Jan-April to $800 million thanks to $2.2 billion earned from gold export.
However, the foreign participation in the stock market remained small. Total net foreign indirect investment capital (FII) into Vietnamese stock market achieved $45.3 million until May 15, in which their net sales on the bond market was about $300 million in Q1, and during the two following months, they returned with a net purchase of $83 million.
In another aspect, the total deposit balance in foreign currencies up to the end of April grew by 4.52 percent from 2008 end while the US dollar outstanding loans fell 1.6 percent correspondingly. The main reason causing a strong rise in US dollar/dong forex rate is that a huge volume of foreign currencies was kept by residents and institutions and not supplied to the market whereas the demand of US dollar for import and debt payment was jumping, wrote the group.
As forecasted, Vietnam’s trade deficit in 2009 will drop by 60 percent year on year to $6.9 billion with a 10 percent reduction in export turnover estimated at $56 billion (gold export exclusive) and $58.2 billion (gold export inclusive) and a 19 percent decrease in import spending that could be $65.1 billion.
In the first four months, total export turnover reached $18.29 billion (gold export inclusive) and $16.09 billion (gold export exclusive), down 13.7 percent from 2008.
In the context that the export output of key items still is in the upward trend (crude oil export up 20.2 percent, coffee 18.8 percent, rice 49.9 percent), an estimated fall in 2009-export turnover will be for decreasing export prices.
Recovery of big economies could start from 2010, including Vietnam’s main importers namely US, Europe and Japan.
Concerning import, Jan-April import spending was recorded at $17.83 billion, tumbling 41 percent against the same period of last year. Both export price and output of key commodities slipped, typically the import value of steel and cast iron was down 66.9 percent, CBUs jumping down 53.9 percent, fuel 57.3 percent and machines and equipments plunging 27.3 percent.
In the next time, the government’s demand stimulating packages (especially lending rate subsidisation package) will be widened to medium and long term capital demands, whereby the demand for importing machines and equipments from the second quarter will be promoted. Yet, domestically made petroleum products from Dung Quat refinery will supply a part of demand so the import in 2009 could decline 19 percent y-o-y.
Bidv forecasted actualised FDI will reach $5 billion. FII flowing to Vietnam is now estimated at $2.5 billion.
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