Forex rate vs interest rate
Forex rate and interest rate are two major macro variables in the economy, and they alongside inflation take center stage in monetary management. The correlation between the two variables was specially visible in 2022, with the State Bank of Vietnam (SBV) pivoting around each of them in its
Real interest rate too high
Lately, knock-on effects from the monetary tightening policy designed to fight inflation and maintain the forex rate, coupled with negative impacts from the corporate bond crisis (and the response to that crisis as well) have led to liquidity constraints, prompting banks to hike interest rates
What are implications of a weakening dollar?
The U.S. dollar has steadily dropped against the Vietnamese dong currency. This is good news given that the foreign exchange market normally comes under pressure from the huge year-end demand of importers for foreign currency. Are supply and demand equated? The State Bank of Vietnam (SBV), on
Policy space for forex control
With pressure on the local currency still lingering, while resources and vehicles required to stabilize the forex rate are being exhausted, a big question arises over whether the monetary regulator still wields any policy space for forex control in the coming time Increasing pressure Since October
Why a wider trading band
The State Bank of Vietnam (SBV) on October 17, 2022 widened the trading band of the Vietnamese dong currency from 3% to 5% on either side of the central exchange rate, with immediate effect, amidst interest rate hikes by central banks around the world Another factor behind the scenes, however, was
A forex policy that can work
It is probably high time for Vietnam to embrace a more flexible forex policy, possibly a measured floating scheme similar to the approach taken by regional countries in the aftermath of the 1997-1998 financial crisis. Current forex policy In the past, reality in Vietnam showed that the currency