June 25, 2024
HANOI – Việt Nam did not manipulate the rate of exchange between the Vietnamese đồng and the US dollar for purposes of preventing effective balance of payments adjustments, or gaining unfair competitive advantage in international trade in the four quarters through December 2023, according to a recent report of the US Department of the Treasury (USDT).
In the report on macroeconomic and foreign exchange policies of major trading partners of the US released last week, USDT said a few trading partners that ran current account surpluses did purchase foreign currency (Singapore, Việt Nam, and potentially China) on net over these four quarters, but they too did not meet the criterion for preventing effective balance of payments adjustments or gaining unfair competitive advantage in international trade.
“In the case of Việt Nam, foreign exchange purchases were also modest and were undertaken to reaccumulate some of the more than US$20 billion reserves sold in 2022,” the report states.
In this report, USDT has reviewed the 20 largest US trading partners against the thresholds Treasury has established for the three criteria in the 2015 Act: A significant bilateral trade surplus with the US is a goods and services trade surplus that is at least $15 billion; A material current account surplus is one that is at least 3 per cent of GDP; and Persistent, one-sided intervention occurs, when net purchases of foreign currency are conducted repeatedly, in at least 8 out of 12 months and these net purchases total at least 2 per cent of an economy’s GDP over a 12-month period.
USDT finds that no major trading partner met all three criteria under the 2015 Act during the four quarters ending December 2023, such that no major trading partner requires enhanced analysis.
However, some countries, including Việt Nam, remained in this report’s monitoring list as the country meet the criteria for having a significant bilateral surplus and a material current account surplus.
This year’s monitoring list comprises China, Japan, Taiwan (China), Malaysia, Singapore, Việt Nam and Germany. All except Japan were on the monitoring list in the November 2023 Report.
USDT has established a monitoring list of major trading partners, whose currency practices and macroeconomic policies merit close attention. When a major trading partner meets two of the three criteria in the 2015 Act, that trading partner is placed on the monitoring list.
Once on the monitoring list, an economy will remain there for at least two consecutive reports to help ensure that any improvement in their performance, such that they no longer meet two of the three criteria for enhanced analysis, is durable, rather than being due to temporary factors. As a further measure, USDT will add and retain on the monitoring list any major US trading partner that accounts for a large and disproportionate share of the overall US trade deficit, even if that economy has not met two of the three criteria from the 2015 Act.
Forex rate
The central exchange rate of the đồng against the US dollar listed by the State Bank of Vietnam has tended to decrease thanks to the SBV’s timely policies to control exchange rate fluctuations.
Accordingly, on the session ending last week, the SBV announced the rate at VNĐ24,256 per dollar, down VNĐ3 compared to June 17, first day of the week.
With a margin of +/-5 per cent, the ceiling exchange rate applied by commercial banks on the last day of the week was VNĐ25,468 per dollar and the floor exchange rate was VNĐ23,043 per dollar.
At commercial banks, dollar prices last week increased on the buying side and decreased on the selling side.
BIDV on the last day of the week listed the dollar price at VNĐ25,251 and VNĐ25,468 per dollar for buying and selling, respectively, an increase of VNĐ20 on the buying side and a decrease of VNĐ3 on the selling side compared to the first day of the week.
At Vietcombank, the dollar price was listed at VNĐ25,217 and VNĐ25,467 per dollar for buying and selling, up VNĐ16 on the buying side and down VNĐ4 on the selling side compared to the first day of the week.