The foreign exchange market changes unpredictably

06-Feb-2020 Intellasia | Tri Thuc Tre | 6:02 AM Print This Post

The SSI Securities Corporation Analysis Department (SSI Research) had just released a monetary market report for the week of January 20 to January 31, 2020. Accordingly, the analysis team said that the foreign exchange market would have a year of unpredictable volatility.

The optimism after the agreement between the US and China on January 15 was overshadowed immediately by the Coronavirus (nCoV) epidemic. The World Health Organization (WHO) had declared a global emergency in the context of the continuing epidemic of disease with a focus on China.

China’s critical position in the global supply chain at the moment made the estimated loss with global economic output from this outbreak possibly much greater than the $40 billion loss of the SARS epidemic in 2003. The exchange rate of USD/CNY increased to the area above 7.0.

The stock market was in red, and oil price dropped by 10.3 percent in the second half of January while gold continuously climbed and peaked at 1,587 US dollar per oz, which was the highest level since April 2013 up to then. The Japan Yen (JPY) and Franc Swiss (CHF) also appreciated by 1.64 percent and 0.53 percent respectively while most other currencies depreciated against the US dollar.

Particularly, the British Pound (GBP) increased to 1.3%, returning to 1,3205 USD/GBP after the United Kingdom (UK) officially left the European Union (EU) on January 31, 2020, after the persistent Brexit process. The UK and EU would enter an 11-month transition period for the two sides to negotiate and sign a trade agreement. The euro almost went flat, the US Dollar Index (DXY) dropped to 97.3 due to appreciation of Japan Yen and British Pound.

Although the supply of foreign currencies in the country was still plentiful, but influenced by global movements, the USD/VND exchange rate also inched up by 5 VND/USD in the direction of buying and 25 VND/USD in the direction of selling on banks, up to 23,100 dong and 23,270 dong; increased by 30 VND/USD in the bid and 120 VND/USD in the afternoon to sell on the free market, to 23,200 dong and 23,300 dong. The difference in buying and selling rates widened, currently at the highest level in recent years. The central exchange rate was increased by 39 VND/USD, to a new peak of 23,196 VND/USD while the buying rate of the State Bank of Vietnam (SBV) remained unchanged at 23,175 VND/USD.

For the whole of January, the USD/VND exchange rate almost went flat and only increased at the end of the month due to the pressure from international developments. Domestic supply and demand of foreign currency remained stable, in addition to the widening VND/USD interest rate gap on the interbank, which would limit the fluctuations of the USD/VND exchange rate in the current unpredictable context.

 

Category: Finance, Vietnam

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