As end of year payments rise when commercial commitments fall due as is usually the case, the next two months will see whether the monetary market becomes more intense or not.
This year the dong has weakened only by only 1.9% against the dollar in the last ten months while the figure was 3.3% in the same period last year and an annualised 3.8% for the whole of 2001. The previous forecast that the dong would weaken by an annualised 4% in 2002 has been revised down to around 3%.
Despite a heavier trade deficit in 2002 estimated at around US$2 billion, non-trade hard currency inflows increased approximately US$1.8 billion over 2001, including a US$500–600 million increase in remittances from Overseas Vietnamese (Viet Kieu) and US$150-200 million more in tourism revenue.
The US Federal Reserve last week cut interest rates to the lowest level in 41 years, which possibly will soon be reflected in a lowering of US dollar deposit interest rates domestically.
Concerning the dong, in ten months, 90% of the year’s plan for lending has been fulfilled and dong liquidity eased due to new and more open decisions by the State Bank of Vietnam (SBV). Non-cash payments started to be applied in many sectors. The number of personal savings accounts doubled the year’s plan in the first ten months. Bank payments increased by over 20% in HCM City and Hanoi.
Bankers forecast that the monetary market in the next two months will be stable with only slight fluctuations if any.