Fed rate hike could pressure exchange rate

Thursday, Dec 15, 2016 11:45

At Vietcombank, the buying rate is listed at VND22,700 and the selling rate at VND22,770 for one US dollar, both up VND40 from Wednesday. — Photo vnmedia.com

In a long anticipated move, the US Federal Reserve decided Wednesday to raise the benchmark interest rate by a quarter percentage point to 0.5 per cent, marking the first hike since December 2015 and only the second in a decade.

The move is unlikely to shock the Vietnamese economy and monetary market, Nguyen Duc Thanh, Director of the Viet Nam Institute for Economic and Policy Research, told cafef.vn., though it is likely to place pressure on foreign exchange.

He said the trend had been anticipated worldwide for most of the year, but given that the dollar’s value is expected to increase compared to other currencies. the Việt Nam đồng would depreciate like other currencies, he added.

On the positive side, Viet Nam’s foreign reserve of $40 billion is at a record high, so the country will benefit from the dollar’s appreciation, Thành added.

The State Bank of Việt Nam yesterday revise up the VND/USD reference exchange rate by 11 dong from December 14 to touch VND22,135 per US dollar.

With the current trading band of +/- 3 per cent, the ceiling rate applicable for commercial banks during the day is VND22,799 and the floor rate is VND21,471 for one US dollar.

The rates listed by commercial banks at the opening hour saw light fluctuations.

Yesterday, the Bank for Foreign Trade of Viet Nam offered a buying rate of VND22,700 and a selling rate of VND22,770 for one US dollar, both up 40 dong from the previous day.

The Asia Commercial Bank listed its buying rate at VND22,690, up 20 đồng, and the selling rate at VND22,780, up 30 đồng from Wednesday.

Domestic gold prices on Thursday also plummeted by VND200,000-250,000 per teal from Wednesday’s level. — VNS

— VNS

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