Viet Nam's foreign reserves are estimated to hit $75 billion. — VNA/VNS Photo

Viet Nam’s foreign reserves have surged 2.5 times against 2015, Governor of the State Bank of Viet Nam (SBV) Le Minh Hung said.

Hung did not mention the exact figure, but local media quoted a close source saying SBV has bought US$16 billion so far this year, which has helped raise the national foreign reserves to $75 billion.

Earlier, SBV reported the country’s foreign reserves stood at $73 billion by the end of October.

The amount of foreign currencies the central bank has purchased this year is much higher than the $11 billion it bought in 2017 and the $6 billion in 2018.

Sufficient foreign reserves have been a key source to help the country prevent adverse impacts caused by external factors, Hung said, adding that the reserves would continue to be used for active intervention in the monetary market, ensuring currency stability.

According to Hung, the USD/VND exchange rate and the foreign exchange market has been stable while the liquidity of the market has been good throughout the year, even though the trade war caused the Chinese yuan to fall to its weakest level against the US dollar in 11 years.

The stability of the forex market has helped the SBV further build up the country’s foreign reserves over the year, Hung noted.

Experts attributed the stability to the SBV’s flexible central rate management mechanism, which ensured the domestic foreign exchange market was less affected by global factors.

In addition, the domestic US dollar supply-demand relationship was relatively stable thanks to foreign currency supply from exports, foreign investment, official development assistance, tourism and remittances.

The rise in the country’s foreign reserves was reported in the context of the foreign exchange rate in the domestic market being relatively stable. According to the central bank, liquidity of the domestic foreign exchange market was good and met the demands of local organisations and individuals.

The SBV set the daily reference exchange rate at VND23,162 per US dollar on December 26, down 1 dong from the previous day.

With the current trading band of +/-3 per cent, the ceiling rate applied to commercial banks during the day is VND23,857 per dollar and the floor rate VND22,467 per dollar.

Analysts forecast it is highly possible the SBV would continue buying foreign currencies in 2020 to increase the national forex reserves. It is difficult to say how much it would buy, but if the US and China can find an agreement in trade, it would not be a surprise if the central bank buys another $10-15 billion. — VNS