On May 7th, the State Bank of Vietnam (SBV) has decided to loosen interbank exchange rate of foreign currency up to 1%. Earlier, on Jan 7th, SBV also decided to increase the foreign currency exchange rates to 1%. So, after 2 times, the increase "hit the ceiling" compared to SBV’s commitment to increasing to 2% this year. Binh Duong Newspaper had an interview with Mr. Le Tan Tay, Director of DongA Bank - Binh Duong branch:
- What is your opinion about SBV’s decision on loosen interbank exchange rate of foreign currency?
- The overall economic context in 2015 has been brighter than previous years. In our country, the number of newly registered enterprises increased, export and import turnover increased. This is a good sign.
At the regional level, early in the year, some countries has devaluated currency to create competitive advantage, dominate export markets. Thus, some manufacturers, exporters urged to increase exchange rate, while some manufacturers, imports of raw materials had the opposite desire. This could lead to arbitrage.
To stabilize the market, the decision of the SBV was very timely and correct.
- The commitment of SBV in 2015 to stabilizing exchange rate at 2%. But after 2 adjustments, the rate has hit the celling. What is your opinion about this issue?
- Deliberate currency depreciation is completely different with currency self-depreciating. For example, the unstable political situation in Ukraine has made its currency and some related monetary institutions devalue. Japanese yen has been devalued by 20% against the US dollar since earlier this year; this was a deliberate currency depreciation to increase competitive advantage, ensuring economic development strategy of a country.
I think, the decision of the SBV also had the same purpose of protecting national economy and businesses.
- According to many experts, the adjustment of the exchange rate will have an impact on costs of living in the future. Do you have any forecast?
- All changes have certain effects with certain delays. For example, electricity sector decided to increase the price, then water and some other essential commodities. Luckily, gasoline price has stabilized at low level to benefit consumers, manufacturers. But from there, things have to change in order to start a new circle. That is the market law.
After deciding to loosen exchange rate and adjusting electricity price, the Ministry of Finance issued documents to ask Department of Finance to strengthen inspection of the market price in order to avoid arbitrary price increases. Thus, in the near future, the market may set a new price frame that should be controlled strictly.
- It is said that prices of petrol and electricity would lead to price increase of essential commodities. What is your opinion?
- The rule always has the chain reaction. For example, previously, a spinach bundle cost VND3,000 to 5,000, now cost VND5,000. This increase may a big growth but had not high value. Meanwhile, farmers have to pay for seeds, supplies, fertilizer and labor with high prices. A spinach seller had to sell 50 bundle/day to ensure living. The important thing is a reasonable increase to be accepted by the market.
Despite market changes, there would be also difficulties accompanied by opportunities. We have to keep pace with it. At the present, our national economy has deeply integrated into the world economy, Vietnamese goods has built a reputation to customers. The most critical thing is to stabilize manufacture, product quality to create trust and reputation to customers.
Reported by D.Chi – Translated by Ngoc Huynh
