Vietnam’s central bank said record-high foreign reserves will enable it to keep the currency stable for the rest of the year as the government focuses on boosting growth in the Southeast Asian economy.
With reserve levels at 45 billion dollars, “we are confident that we will be able to maintain the dong’s value,” in 2017, Nguyen Thi Hong, deputy governor of State Bank of Vietnam, said on the sidelines of a meeting in Hoi An on Saturday. “Such a high level of foreign reserves will allow us to step in to stabilise the money market when needed.”
After a series of devaluations in 2015, Vietnam’s central bank moved to a more market-based framework of setting the currency last year, adjusting the dong’s reference rate on a daily basis. The currency has been one of the most stable in Asia this year.
An increase in remittances from Vietnamese living abroad has helped boost foreign reserves this year, which allows the central bank to continue focusing on policies to support economic growth, Nguyen Hoang Minh, deputy head of SBV in Ho Chi Minh, said in an interview last month.
The central bank will ensure lenders have enough liquidity “so that they can lend at lower interest rates,” Hong said. “By helping banks with more cash availability, we will be able to bring down lending interest rates at banks without having to cut our policy rates.”
Vietnam was one of only a handful of Asian central banks to ease monetary policy this year, unexpectedly cutting its benchmark interest rate for the first time in three years in July.
The government is struggling to meet its target of 6.7 percent economic growth this year. If it can reach the target, that will be the fastest pace since 2007. The economy grew 6.41 percent in the nine months through September. – Bloomberg