Associate Professor, Dr. Nguyen Thuong Lang, a senior lecturer at the National Economics University’s Institute of International Trade and Economics, said the State Bank of Vietnam had taken an appropriate step by raising the reference exchange rate to a record high on September 15, ahead of the Fed meeting.
He said that as the US dollar appreciates against other currencies while Vietnam keeps its interest rate unchanged, the dollar is also likely to appreciate against the Vietnamese dong, which could support Vietnam’s exports.
Mr. Lang said: “Vietnamese exports to the US will become more competitive, while Vietnam’s imports from the US could decline. US investment in Vietnam could also increase, as Vietnam becomes more attractive in terms of exchange rates. From this perspective, Vietnam’s trade balance could improve, while the capital account could also move in a positive direction, meaning that capital inflows into Vietnam could increase.”
Economists agree that the Fed’s rate hike also provides an opportunity for Vietnam to make its monetary policy more flexible.
At the same time, however, Vietnam needs to closely monitor market developments and take measures such as open-market operations and exchange-rate management. If necessary, Vietnam could also use its foreign-exchange reserves to help stabilize the market.
