According to the Viet Dragon Securities Company, more than $10 billion in foreign exchange reserves have been sold since the beginning of the year. At the same time, after just four trading sessions, the State Bank of Vietnam (SBV) has net bought nearly VND70 trillion ($3.01 billion) from open market operations (OMO). As a result, the pressure on the USD/VND exchange rate eased significantly.

After more than two years of being “frozen”, the open market operations (OMO) channel was reopened by the State Bank of Vietnam (SBV) on June 21 with an offering of VND10 trillion ($430 million). This reveals that the central bank is ready to withdraw money from the market to support inflation control.

According to State Bank of Vietnam (SBV) Governor Nguyen Thi Hong, as of the end of April, bad debts in the real estate sector totaled VND37 trillion ($1.59 billion), or 1.62 per cent of all outstanding loans in the economy. The central bank is strengthening the inspection of credit applications in the real estate sector to control bad debts and term liquidity risks.

The State Bank of Vietnam (SBV) has net injected VND3.3 trillion ($143.77 million) into the market to support system liquidity given its inadequacy as payment needs grow with Vietnam reopening to tourism.

Once the pandemic is brought under control, credit demand will increase and it is likely that the State Bank of Vietnam will provide more credit space to commercial banks.

The Vietnam dong (VND) is one of the few currencies to have appreciated against the USD since the beginning of the year, showing that the State Bank of Vietnam (SBV) has respected market regulation because the country is heavily dependent on exports and FDI capital.

Given that Vietnam is no longer being labeled a “currency manipulator” by the US, the State Bank of Vietnam (SBV) will actively buy foreign currencies in the time to come, after being cautious in the first seven months of the year. This will help it have more room to implement policies in support of businesses.

Covid-19 has had an impact on bank loans, with a number of regulations from the State Bank of Vietnam relating to debt structure no longer being appropriate. Banks have therefore made a number of proposals and recommendations to address the problems they face.