Dong/US dollar forex rate forecasted to fall by year end

As per one analyst forecast between now and the year end; the dong/US dollar forex rate will reduce because of the huge volume of US dollar flowing into Viet Nam.

At Eximbank, the selling price of US dollar between October 7 and 10 declined by 5 dong per US dollar from 16,620 dong to 16,600 dong.

According to commercial banks, currently there is a surfeit of US dollars in the market while buying demand is decreasing. Trade deficit in Jan-Sep ballooned to US$15.38 billion dong but the figure of September alone was only US$500 million against August's US$900 million. Meanwhile, FDI in the country reached US$8.1 billion in the first nine months of this year and the inward remittances also surged sharply.

Ho Huu Hanh, director of SBV-HCM City Branch said a sharp rise in inward remittances is thanks to overseas Vietnamese (Viet Kieu) especially US Vietnamese transferring capital into Vietnam for business purposes.

At the latest meeting on the stock market held by Ho Chi Minh Stock Exchange (STC), many people predicted that Vietnam could become an attractive investment destination and the foreign indirect and direct investment capital could increase highly.

But Dao Hong Chau, deputy general director of Eximbank said that it is difficult to estimate this year's foreign currency market due to the conditions in the global market.

Regarding overseas remittances, a commercial bank's general director stated, that one should not be too optimistic about this year's inward remittances. By year end, the remittances can fall because overseas Vietnamese may be affected from the US financial crisis.