The State Bank of Vietnam (SBV) has said it is ready to intervene in the market when the intervention rate is lower than the current listed exchange rate on a large scale by spot or forward transactions to stabilise the foreign exchange market and the macro-economy.

Illustrative image (Source: VNA)

The statement was made by Pham Thanh Ha, Director General of the SBV’s Monetary Policy Department.

According to Ha, in January, in the context of favorable international markets and a stable market rate, the SBV continued to increase its foreign exchange reserves.

Since February, although the foreign exchange market has been under certain pressure due to the complicated developments of the COVID-19 pandemic,  exchange rate fluctuations had been relatively calm. On some days, the exchange rate fell close to the central bank's buying rate. Credit institutions have continued to sell foreign currencies to the SBV, he stated.

However, from the beginning of last week, the exchange rate has risen as fluctuations on the global financial market increase. However, market liquidity was basically stable and legitimate foreign currency demands have been met promptly, he added.

Ha said that the reasons for the recent increase in foreign exchange rates are the complicated developments of COVID-19 and the depreciation of currencies in many of Vietnam’s major trade markets.

However, the balance of foreign currency supply and demand has remained stable. Vietnam enjoyed trade surpluses of US$1.82 billion in the first two months of 2020 and US$880 million in March. The foreign exchange position remains positive and legitimate foreign currency needs of customers are being fully met by credit institutions.

The central bank will continue to keep a close watch on the developments of domestic and foreign markets, making possible scenarios, managing the reference exchange rate flexibly, and using monetary measures and tools synchronously to stabilise the foreign exchange market, Ha stated.