Central Bank of Vietnam buys dollars to replenish reserves after selloff

The Central Bank of Vietnam is taking steps to bolster its foreign exchange reserves by buying up more US dollars after it sold a large amount to support its currency.

The deputy governor said that there are positive signals in the foreign exchange market that allow the central bank to continue buying foreign currency.

There is no confirmed data on Vietnam’s foreign exchange reserves, but at the end of 2021, this figure was estimated at $100 billion.

The State Bank of Vietnam (SBV) had previously sold a large amount of US dollars to support the local currency, which has recently fallen to its lowest level due to capital outflows as the US Federal Reserve repeatedly raised interest rates to cope with inflation.

According to some information, SBV has sold about $20 billion.

Large foreign investment inflows and a trade surplus this year have helped slow the weakening of the dong, which has lost about 3% against the dollar this year.

The deputy governor also said that the inflation rate should be below 4% in 2022 and that NPLs in the banking system is under control.

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The State Bank of Vietnam also said it would take various monetary policy measures depending on the situation to stop inflation at 4.5% next year.

In comparison, lending by Vietnamese banks increased by 12.87% compared to the end of last year.

The central bank has raised the 14 percent cap on credit growth for the banking system this year by 1.5 to 2.0 percentage points.

Vietnam is one of the fastest-growing economies in Asia, with strong manufacturing and exports, with gross domestic product forecast to grow by 8% this year.

Vietnam’s trade surplus could reach $11 billion this year.

The inflow of foreign direct investment is planned to grow by 13.5% compared to last year to $22.4 billion.