Remittances to HCM City fall by 10 per cent

Overseas remittances to HCM City this year are expected to reach US$5 billion instead of the expected $5.5 billion.- Photo cafef.vn

The fall is partly due to concerns about the US president-elect Donald Trump. Overseas Vietnamese are holding on to their US dollars, experts have said.

“Remittances from the US account for 60 per cent of total remittances to Viet Nam and when the US faces fluctuations, it impacts the Vietnamese remittance flow,” Nguyen Hoang Minh, deputy director of the State Bank of Viet Nam’s HCM City branch, was quoted as saying in the Sai Gon Giai Phong (Liberated Sài Gòn) newspaper.

In addition, information about a possible increase in the interest rate by the US Federal Reserve (FED) by the end of the year has also sparked concerns.

“Furthermore, the Trans-Pacific Partnership has been put to a standstill, so investment in anticipation of the agreement in Viet Nam has been affected,” Minh added.

The reduction in remittances could affect the amount of capital invested in business and production.

“However, the State Bank of Viet Nam has retained its strong and efficient policies to control and manage the exchange rate, and even more, Viet Nam has diversified foreign currency supplements from other businesses like tourism and exports,” Minh said.

As for the recent sharp fluctuation in the exchange rate in the domestic market, Dr. Le Anh Tuan, deputy general director of Dragon Capital’s investment and economy division, said that it was normal as the US dollar had become 1 – 2 per cent stronger, but the Vietnamese market was still not familiar with fluctuations in international foreign currency and its global effects.

“Recent domestic fluctuations in the exchange rate were caused by psychology,” Tuan said.

In HCM City, despite recent fluctuations in the exchange rate, foreign deposits of enterprises and individuals at commercial banks have remained normal.

Additionally, debt was around $62 billion, of which 10 per cent were foreign loans, a year-on-year increase of 16.2 per cent.

Nguyen Hong Hue, deputy president of the Business Association of Overseas Vietnamese, predicted that remittances would continue to increase in the coming time thanks to Government efforts and opportunities for overseas Vietnamese investing in high technology, banking and services.

“There are a lot of overseas Vietnamese who would like to bring remittances back to HCM City for investment and business,” he said.

By the end of November, total remittances to HCM City were around $4.36 billion.

The State Bank of Viet Nam also said that total remittances to Viet Nam this year would only be $9 billion instead of the expected $11-12 billion, a sharp reduction in comparison with 2015, at $12.25 billion.

“But remittance amounts will sharply increase in the Lunar New Year, as 120,000 to 130,000 overseas Vietnamese return to the country,” Hue said.