Business Briefing

Gold rate

Vietnam’s gold prices saw a historic one-day fall on July 18, going down by VND 4 million (USD 170) a tael. The Saigon Jewelry Company (SJC) sold its gold at VND 64 million on July 18 afternoon, down almost 6 percent from the weekend. A tael equals 37.5 grams or 1.2 ounces.

The gold prices were down on dollar appreciation, with investors selling assets, including gold, to buy the greenback, said Chairman Tran Thanh Hai of SJC Phu Tho. Strong selling pressure following an announcement by the central bank on looking at the possibility of reducing SJC’s monopoly on gold saw people sell gold bullion and stockpile gold jewelry.

Currently, a tael of gold bullion and jewelry in Vietnam costs VND 17.5 and VND 5 million more than global prices, respectively. Hai expected prices to fall further in the next few days, tracking drops in the London and Chicago exchanges. "Prices may fall below the USD 1,700 thresholds [per ounce]," he added.

Photo: Zing

Reference exchange rate

The State Bank of Vietnam set the daily reference exchange rate for the US dollar at VND 23,221/USD on July 19, down VND 21 from the previous day. With the current trading band of +/-3 percent, the ceiling rate applied to commercial banks during the day is VND 23,920/USD, and the floor rate is VND 22,527/USD.

The opening-hour rates at many commercial banks tended to decrease. At 8:40 am, Vietcombank listed the buying rate at VND 23,280/USD and the selling rate at VND 23,590/USD, unchanged from July 18. Meanwhile, BIDV cut VND 10 to both rates, listing the buying rate at VND 23,300/USD and the selling rate at VND 23,580/USD.

Photo: Zing

Finance news: Banks upbeat about Q3 2022 business results

A majority of credit institutions (CIs) are optimistic about their business performance in Q3 2022, the State Bank of Vietnam (SBV)’s latest survey on business trends of credit institutions showed. Under the survey released last week, 72.5-80.7% of CIs expected their business performance results in Q3 2022 to improve against the previous quarter.

In Q3 2022, 54.6% of CIs expected their business activities to increase slightly compared to Q2 2022, while 38.9% of CIs expected to see no change and 6.5% of CIs were worried about a slight decline in business results. In 2022, 87.7% of CIs hope their pre-tax profit growth to be positive compared to 2021, while 3.8% of CIs expect unchanged profit. However, about 8.5% of CIs are still concerned about negative profit growth in 2022, higher than the 5.8% recorded in the survey in March 2022.

According to CIs, rising demand of the economy for banking products and services, along with rebounding business and financial conditions of customers are the most important factors to help them improve business performance in Q2 2022. Meanwhile, the main factor hindering their growth in the period was fiercer competition in the market.

After maintaining good liquidity in Q2 2022, CIs expect the liquidity of the banking system to be continually better in Q3 2022 and the whole year, compared to 2021. CIs expected the banking industry to gain an average deposit growth of 4.9% in Q3 and 11.5% for the whole year. They estimated the credit of the banking system to rise by 4.1% in Q3 and reach 15% in 2022.

According to the survey results, the bad debt ratio of the banking system was basically unchanged, or only slightly decreasing in Q2 2022 and Q3 2022 compared to the previous quarter. CIs said the growth of the workforce and employment situation of the banking and finance industry slowed compared to the previous quarter and was expected to have more positive developments in the whole of 2022 compared to 2021.

Photo: Zing

Forex market: Central bank sells greenback to stabilize forex market

The State Bank of Vietnam (SBV) has so far this year sold about 12-13 billion USD to stabilize the domestic forex market, according to Viet Dragon Securities Corporation (VDSC). The value was equal to some 11% of Vietnam’s foreign exchange reserves. The country’s foreign exchange reserves are currently at more than 100 billion USD, equal to 3.1 months of imports, and are forecast to keep rising. The value, which is four times higher than in 2015, is expected to be an important buffer to stabilize the domestic forex market and help the country’s economy withstand external shocks.

According to VDSC, the SBV’s move was aimed to restrict the devaluation of the Vietnamese dong, reduce pressure on the foreign exchange rate and balance the supply and demand of the greenback in the domestic forex market.

In the context that most currencies have fallen significantly against the US dollar after the Federal Reserve raised interest rates, the dong has only weakened against the US dollar by around 2% so far this year, which shows the dong is relatively stable and listed among currencies with the lowest devaluation in the Asia-Pacific region.

According to VDSC, despite several net withdrawals of the dong through the sale of the dollar and T-bills, domestic demand for the greenback remains strong. It has shown no signs of cooling down as the interest rate of dollar loans in the interbank market continue to increase and the rate gap between dollar and dong loans in the interbank market also keeps rising.

In the short term, VDSC expects the SBV will continue to use the foreign exchange reserves and the T-bill sales to withdraw the dong in the open market operation (OMO) to reduce the dong liquidity in the banking system so as to curb pressure on the exchange rate. VDSC forecast the domestic exchange rate might be under higher pressure at year-end. However, it still expects the dong to depreciate only about 2.0-2.5% in 2022, remaining unchanged against its previous forecast.

Weather Forecast

The rain is likely to last until July 25, heavy rain will happen mostly at night and morning. During thunderstorms, there is a possibility of tornadoes, lightning, hail, and strong winds. The North continues to have hot weather with the highest temperature ranging from 35 to 37 degrees. The midland and plain areas have showers and thunderstorms in the evening and at night.

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