KTFA: Vietnam : Central bank sold roughly $7 billion to stabilise forex market
24th June, 2022
The State Bank of Việt Nam (SBV) sold about US$7 billion in the first five months of this year to balance the supply and demand sources of the greenback in the domestic forex market, according to the Viet Dragon Securities Corporation (VDSC).
The USD/VNĐ exchange rate listed at Vietcombank has so far this year increased by approximately 2 per cent.
The average rate of commercial banks according to Bloomberg’s statistics in the period has increased by about 1.7 per cent.
During May and the first half of June alone, the đồng depreciated about 1.0 per cent on the official market. However, in the context that most currencies have fallen significantly against the US dollar after the Federal Reserve raised interest rates, the đồng has remained relatively stable.
The US Dollar Index has so far this year risen by 9.2 per cent, resulting in the depreciation of many currencies. The Japanese yen has fallen by 16.8 per cent, followed by the British pound (11.5 per cent) and euro (8.5 per cent). The Chinese yuan has also dropped by 6.3 per cent, Indian rupee (5 per cent) and Malaysian Ringgit (6 per cent).
According to VDSC’s analysts, the domestic exchange rate might be under higher pressure at some times in the coming months, but the SBV will have enough resources to intervene and rebalance when necessary.
Việt Nam’s foreign exchange reserves are currently measured at more than US$100 billion, equal to 3.1 months of imports, and are forecast to keep rising.
The value, which is four times higher than in 2015, will be an important buffer to stabilise the domestic forex market and help the country’s economy withstand external shocks.
Though exchange rate management in the remaining months of the year is still a big challenge for the SBV, VDSC’s analysts believe that the đồng will not depreciate as strongly as other currencies as in the latest meeting this month, the SBV affirmed to continually manage the exchange rate flexibly and readily cope with greater pressure caused by external uncertainties in the near future.
Under the move, the VDSC’s analysts expect the đồng to depreciate only about 2.0-2.5 per cent in 2022, 1 percentage point higher than its forecast at the beginning of this year.
Earlier, Vietcombank Securities Company (VCBS) believed the USD/VNĐ exchange rate will increase by under 2 per cent in 2022.
The State Bank of Vietnam set the daily reference exchange rate for the US dollar at VNĐ23,087 per dollar on Tuesday, down VNĐ5 from the previous day. With the current trading band of +/-3 per cent, the ceiling rate applicable to commercial banks during the day is VNĐ23,779 per dollar and the floor rate VNĐ22,394 per dollar. The rates at some commercial banks also dropped.
BIDV listed the buying rate at VNĐ23,100 per dollar and the selling rate at VNĐ23,380 per dollar, both down VNĐ10 from June 20. Meanwhile, Vietcombank kept both rates unchanged from June 20, listing the buying rate at VNĐ23,070 per dollar, and the selling rate at VNĐ23,380 per dollar. LINK
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Samson: Global manufacturers gradually focus on Việt Nam
1st July, 2022
Many manufacturers in the global supply chain of major firms are gradually focusing on Việt Nam.
In particular, Apple has moved 11 factories of Taiwanese enterprises in its supply chain to Việt Nam.
Many other firms such as Foxconn, Luxshare, Pegatron, and Wistron are also expanding their production facilities in Việt Nam.
This information was shared at a conference on the situation and proposed tasks and solutions to remove difficulties and support production and business in the last six months of this year, organised by the Ministry of Planning and Investment this week.
Samsung built its largest research and development centre in Southeast Asia worth US$220 million in Hà Nội and is also planning to continue to expand factories in the northern provinces of Bắc Ninh and Thái Nguyên.
Earlier this year, Đồng Nai Province granted investment licences for two $100 million projects of a component supplier for Samsung, Hansol Electronics Việt Nam (South Korea).
To seize the opportunity, Đỗ Thị Thúy Hương, Vice President of the Việt Nam Association of Supporting Industries (VASI), proposed the Government have large-scale selective policies to attract big foreign groups to Việt Nam. However, these policies must be accompanied by “clean” production conditions, environmental protection and no discharge into the environment, she noted. Hương also recommended several issues, such as more supportive policies to improve labour quality and authorities needing to create more favourable conditions for businesses to access credit support policies of the Government.
Previously, Hương said that the root cause of the shifting trends of supply chains to Việt Nam largely came from China’s relatively developed electronics and information technology industry. She explained that they had grown to more than just assembling in the global supply chain.
Việt Nam was a country quite similar to China in electronic manufacturing activities, both in terms of labour and geographical location, infrastructure, and logistics and would be very suitable to receive capital flows, which was also a technological shift.
The VASI Vice President said that, regarding the attraction of large foreign companies, in the early stages, when domestic enterprises were still weak, FDI should be allowed in but must be regulated.
It was necessary to have the hand of the State not only to support foreign businesses but also to have an incubator to support Vietnamese businesses so that they were capable of receiving technology and gradually mastering the technology to have the ability to compete and keep in domestic market, she added. If enterprises were not strong enough, they could not protect their “soft resources,” which was their market, said Hương. LINK
Việt Nam’s GDP hits 10-year high of 7.72% in Q2
30th June, 2022
The Vietnamese economy expanded at 7.72 per cent in the second quarter of this year, the highest rate in the same quarters in the last 10 years, the General Statistics Office (GSO) reported at a press conference on Wednesday.
The figures for the same quarters in the last three years of 2019, 2020 and 2021 were 7.1 per cent, 0.52 per cent and 6.73 per cent, respectively.
In Q2 this year, the agriculture-forestry-fishery sector increased 3.02 per cent, contributing 4.56 per cent to the overall growth of the economy.
The industry and construction sector was up 8.87 per cent, making up 46.85 per cent, while the service sector rose by 8.56 per cent, contributing 48.59 per cent to the general GDP growth, Hương said.
Regarding GDP use, final consumption expenditure increased by 7.32 per cent over the same period last year; accumulated assets rose by 4.57 per cent; exports of goods and services surged 12.33 per cent; and imports of goods and services were up 4.88 per cent.
In the January – June period, the country’s GDP grew by 6.42 per cent, higher than the 2.04 per cent and 5.74 per cent growth rates of the same periods in 2020 and 2021, respectively.
According to GSO General Director Nguyễn Thị Hương, the country’s socio-economic development in the first six months of 2022 has prospered in most industries and fields, especially the processing and manufacturing industry; retail sales of consumer goods and services; and exports.
In terms of economic structure in the first two quarters, the agriculture-forestry-fishery sector accounted for 11.05 per cent of the country’s economy; the industry-construction and service sectors made up 39.3 per cent and 40.63 per cent, respectively, the GSO said.
CPI up 2.96 per cent in Q2
The Consumer Price Index (CPI) in the second quarter of 2022 posted a year-on-year rise of 2.96 per cent.
The office said CPI in June increased by 0.69 per cent month-on-month, up 3.18 per cent against December 2021 and up 3.37 per cent compared to the same period last year.
GSO General Director Nguyễn Thị Hương attributed the increase in CPI in Q2 to the continuous hikes in domestic petrol prices in tandem with world fuel prices, as well as the increase in the price of essential consumer goods and services in line with the price of input materials and transportation costs.
On average, in the first six months, CPI increased by 2.44 per cent over the same period last year; core inflation rose by 1.25 per cent.
The global commodity market continued to face fluctuations in the first half of 2022 and was influenced by economic and political factors, Hương said. “The world economy recovered, the demand for raw materials for production increased while the supply was interrupted, causing commodity prices on the international market to soar,” she said. “The tensions between Russia and Ukraine have pushed up the prices of raw materials and fuel and the world is at risk of a global food crisis,” she said.
In the second quarter of 2022, domestic petrol prices increased by 54.92 per cent over the same period last year, causing the overall CPI to increase by 1.98 percentage points. Domestic gas prices increased by 30.99 per cent over the same period last year, causing CPI to increase 0.45 percentage points.
The price of housing maintenance materials in Q2 went up by 7.81 per cent over the same period last year because the prices of cement, iron, steel and sand increased according to the price of input materials, causing the overall CPI to increase 0.16 percentage points.
The domestic price of rice also gained in line with the export prices of rice. In the second quarter, it increased by 1.07 per cent over the same period last year, causing the overall CPI to increase by 0.03 percentage points.
Besides the reasons for the increase in CPI, there are some reasons for the decrease in CPI in the second quarter of 2022, including the average pork prices down 18.6 per cent compared to last year due to the control of African swine fever and the guaranteed supply of pork, reducing CPI by 0.63 percentage points.
The fees of educational services in Q2 dropped by 2.86 per cent because a number of provinces and centrally-run cities exempted and reduced tuition fees from the first semester of the 2021-2022 school year due to the impact of the COVID-19 pandemic, causing CPI to decrease by 0.16 percentage points.
House rent in the second quarter of this year decreased by 12.33 per cent compared to last year because due to the COVID-19 pandemic, many landlords reduced rent to support tenants. LINK
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Samson: Việt Nam ASEAN’s second largest green bond issuer in 2021
22nd June, 2022
The Climate Bonds Initiatives (CBI) and HSBC have just released the ASEAN Sustainable Finance – State of the Market 2021 report.
Along with other countries in the region, Việt Nam’s sustainable debt capital market has experienced strong growth in the past year.
The report showed that the sustainable debt markets in the six largest ASEAN economies – Singapore, Thailand, Indonesia, Malaysia, the Philippines and Việt Nam – continues to grow rapidly in 2021. Issuance volumes of green, social and sustainability bonds (GSS) reached a record of US$24 billion, an increase of 76.5 per cent compared to $13.6 billion in 2020, while sustainability-linked debt surged 200 per cent over 2020 to $27.5 billion.
The growth rate is said to reflect the positive sentiment of the ASEAN region in allocating capital for the purpose of responding to the COVID-19 pandemic, and supporting sustainable economic growth amid climate change and low carbon emissions in the long term. Việt Nam alone issued a total $1.5 billion of GSS in 2021, nearly five times higher than the value of $0.3 billion in 2020, which maintained stable growth for three consecutive years.
The majority of green bonds and loans in the country last year came from the transportation and energy sectors. Việt Nam is the second largest source of green debt issuance in ASEAN, after Singapore, according to the report.
The two largest transactions that account for most of Vietnamese GSS were $425 million of sustainability bonds with stock options from Vinpearl and a green loan worth $400 million from VinFast (value at the time of transaction announcement). HSBC said that the country’s bond market has swelled over $70 billion in 2021. More than 80 per cent of the issuance was government bonds, while development banks were the second largest issuers.
At the end of 2020, the National Assembly passed the Law on Environmental Protection 2020 with some important amendments, including additional definitions, general requirements for green bonds and incentives for issuers. Việt Nam is also developing a classification system along with the law, which is expected to be enacted this year.
As Việt Nam announced its commitment to achieve net-zero emissions by 2050 at the COP26 conference, it will contribute to the stronger promotion of capital mobilisation through sustainable financial markets to accelerate the carbon emission reduction process. Tim Evans, General Director of HSBC Việt Nam, said that all forms of sustainable finance aim toward the common goal of supporting Việt Nam realise its target of achieving carbon neutrality by 2050, as committed.
Although the sustainable financial market is growing in Việt Nam and ASEAN, the need to mobilise funds to mitigate and help countries adapt to climate change is still very high, Evans added. Fundraising will support the transition to a low-carbon economy that is essential to achieve the Paris Agreement goals and ease the severe impacts of climate change for the ASEAN region and worldwide. However, experts also said that there is still a lot of work to be done for the ASEAN region to achieve the green growth target.
Some policies in the region have contributed to the rapid growth of sustainable finance in ASEAN and it is clear that awareness of climate risks has risen among both policy makers and investors, said Sean Kidney, CBI Director General.
Nevertheless, there is still a gap that needs to be filled soon. The sectors that emit a lot of emissions and find it difficult to change must quickly shift from “brown” to “green”. These are activities, assets and projects related to energy, heavy manufacturing and agriculture. “National initiatives such as Singapore’s Green Financial Industry Taskforce (GFIT) are a good start. However, we need to act faster to get vulnerable regions like ASEAN less affected by the consequences of climate change,” the CBI Director General said. LINK
