Forex reserves hit $37 billion

Foreign exchange reserves are expected to increase when domestic gold keepers sell more gold on the domestic market. Photo soha.vn

Binh told online news-paper Saigon Times that the reserves would be roughly $40 billion if other items such as gold and deposits in foreign currencies by the State Treasury and credit institutions at the central bank were to be included.

It was the first time since the end of last year that the quantum of reserves was made public by the central bank's Governor. The central bank last year said the country's foreign reserves were at an all-time high of $36 billion.

Over the past months, some people had been surmising that Viet Nam's foreign exchange reserves had reduced due to a rising trade deficit. According to the General Statistics Office, the country's trade deficit in H1 this year hit more than $3 billion while last year, it had gained a trade surplus of nearly $2 billion.

Binh expected that the reserves would continue to increase if domestic gold keepers sold more gold in the domestic market in the times to come.

Gold speculation and investment in the local market is not currently as attractive as previously because the central bank fully controls the gold market and can intervene to stabilise the market if necessary.

Before 2012, Viet Nam almost had no gold reserves while gold amounts deposited at commercial banks were large, sometimes reaching more than 30 tonnes.

Binh also affirmed that the central bank continuously pledged to devalue the dong by no more than 2 per cent this year.

The central bank could use the foreign reserves to intervene in the forex market if necessary, Binh said, adding that it could also use other measures such as interest, money supply and exchange rate to stabilise the forex market.

As for the interest rates, Binh said the central bank was executing its policy to help cut the dong lending interest rates to support businesses. However, deposit interest rates would remain stable.