Exchange rate likely to come under pressure in 2020: HSBC

By Le Chi   December 21, 2019 | 09:00 am GMT+7
Exchange rate likely to come under pressure in 2020: HSBC
Vietnam will likely be able to stabilize exchange rate as it had done this year, according to HSBC. Photo by VnExpress/Anh Tu.
Vietnam’s currency exchange rate might face pressures next year due to declining export growth, an HSBC official says.

Ngo Dang Khoa, HSBC Vietnam’s country head of global market, said in a recent note that decreasing global import demand due to the U.S.-China trade war and Brexit could lead to lower exports in 2020.

Vietnam's exports in the first 11 months grew 7.8 percent year-on-year to $241.4 billion, compared to the 14.4 percent growth rate recorded last year, according to the General Statistics Office.

The slower exports growth was seen in major markets: E.U. down 2.3 percent, China down 0.6 percent, and ASEAN grew only 2.4 percent compared 14 percent last year, it said. Only exports to the U.S. rose significantly at 27.9 percent.

Another concern is that Vietnam was added to U.S.’s currency manipulation watchlist in May, which could be a negative factor for the exchange rate next year, Khoa said.

The U.S. Treasury labeled Vietnam a currency manipulator because it has having a high trade surplus with the U.S. Vietnamese officials in the second half this year have been saying they are taking steps to buy more goods from the U.S. to balance bilateral trade.

Importers, exporters and other businesses which have foreign currency loans should be prepared for fluctuations next year, Khoa said

However, he added that the State Bank of Vietnam (SBV), which a large amount of foreign exchange reserves, will likely be able to stabilize the rate as it had done this year.

The foreign exchange reserve reached a record high $73 billion as of October this year.

The USD/VND exchange rate has been stable throughout this year, even though the trade war has made the Chinese yuan fall to its weakest level against the dollar in 11 years.

SBV set a reference rate of VND23,160 Friday, down 1.47 percent from the beginning of the year.

 
 
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