Hanoi – The State Bank of Vietnam (SBV) has continuously bought in hard currencies in the past few months, raising the country’s foreign reserves to a record high of 63 billion USD.
Mai Tien Dung, Minister-Chairman of the Government Office, announced this at a recent press conference following a monthly Cabinet meeting.
SBV bought in 32 billion USD worth of hard currencies in the past more than two years, Dung said.
According to experts, SBV has also changed its way of purchasing foreign currency. Instead of using spot trade, the central bank has used futures contracts for the purchase of hard currencies since February 7 this year.
Previously, the bank bought foreign currency in spot trade, with volumes reaching 1-3 billion USD per day, meaning that an equivalent volume of VND was pumped into the market in a short time.
But since February, the bank has launched three-month futures contracts to regulate the flow in a more flexible way. Some 40 percent of the foreign reserves have been purchased through futures contracts, helping to balance cash flows to moderate the pressures on interest rates, USD/VNĐ exchange rate and inflation.
Experts attributed the stability to reasons such as SBV’s flexible central rate management mechanism, which ensured that the domestic foreign exchange market was less affected by global factors.
In addition to this, the domestic supply-demand relationship with the dollar was relatively stable thanks to foreign currency supply from exports, foreign investment, official development assistance, tourism and remittances.
The rise in the country’s foreign reserves was reported in the context of the foreign exchange rate in the domestic market being relatively stable. According to the central bank, liquidity of the domestic foreign exchange market was good and met the demands of local organisations and individuals.