Over the span of 2017 and the first two months of 2018, Vietnam’s foreign reserves stood at $57.5 billion, six times higher than in 2015, officially attaining the largest scale in the history of the country’s foreign exchange reserves.
|Vietnam's foreign exchange reserves hit nearly $57.5 billion |
Previously in 2015, Vietnam’s foreign exchange reserves ranked sixth among Southeast Asian countries and 19th in the world.
Particularly, over the stretch of 2005-2015, the reserves roughly tripled at the average growth rate of 12.1 per cent per year. By the end of 2016, the reserves expanded by 38.1 per cent, then 28.2 per cent in 2017, and 15 per cent over the first 40 days of 2018. On February 10, the reserves were reported to swell by 6.4 times in comparison to 2005.
Explaining the rapid growth of the country’s foreign exchange reserves, a Vietnamese economist listed several causes behind this overwhelming development in size and pace of growth:
- the surplus of the country’s international payment balance mounting to $5.5 billion;
- the trade balance remaining positive due to a $2.92 billion trade surplus;
- foreign direct investment (FDI) totaling at $17.5 billion and foreign indirect investment at $6 billion;
- ODA disbursement hitting over $2 billion;
- foreign visitors’ spending in Vietnam reaching $8.99 billion;
- and foreign remittance recovering its initial growth rate, exceeding $10 billion.
Additionally, the State Bank of Vietnam (SBV) purchased around $6 billion in foreign currency from Vietnamese citizens thanks to tightly controlled inflation and the VND/USD foreign exchange rate being kept in check.
The Vietnamese economist further added that the expansion of foreign exchange reserves could enhance financial safety and the country’s liquidity.
In particular, the massive foreign exchange reserves could assure the repayment of foreign debts and interest, as foreign debts constituted 45 per cent of the gross domestic product (GDP), and set the groundwork for the country’s financial-monetary market, enabling Vietnam to issue bonds in foreign markets.
By Minh Nhung