Experts said that the Fed’s increase of 0.25% percentage point this time, the impact on the Vietnamese market is not large, maybe, the impact is only short-term.
The US Federal Reserve (FED) raised interest rates for the 9th time since the beginning of last year, increasing by 0.25 percentage points, so the current overnight lending rate of the Fed is 4.75%-5%. For Vietnam, experts said that this interest rate hike was as expected by most investors and experts after two US banks declared bankruptcy.
Not much impact on Vietnam
According to expert Can Van Luc, the Fed’s interest rate increase this time is a necessary step, calculated very carefully, multidimensionally and multi-targeted. Specifically, this decision helps Fed achieve at least 3 goals: First, continue to steadfastly fight against inflation. Second, take into account the instability of the banking market in the US and globally. Third, this move is to protect the policy credibility of the Fed.
For Vietnam, Mr. Luc said that the Fed’s interest rate increase this time is also in the forecast, in the calculations of regulators and investors, so the impact will be insignificant. The problem is that the sentiment and reaction of investors and depositors in the US and globally in the coming days may still be mixed, having a certain impact on the Vietnamese financial market.
Evaluating the Fed’s move to raise interest rates by 0.25%, economist Phan Dung Khanh – Investment Consultant Director of Maybank Investment Bank said that the Fed’s interest rate hike was not a surprise, but was expected. advance notice. The impact of this adjustment period on the Vietnamese market is not large, maybe, the impact is only short-term. The State Bank had a plan in advance and took action to lower interest rates and inject liquidity into the market.
“However, on the basis of the Fed’s interest rate hikes and the Fed’s operating policies in the near future, it can be seen that the era of ‘expensive money’ has not ended, at least this year. For the stock market, the next few sessions will be affected by the Fed’s decision to raise interest rates. It is forecasted that, at least in the medium term, this year will still be a difficult year for the stock market. I expect, in the second half of 2023, the positive level will be more, it should be noted that it is better to note here than the worst level, but not to the dream level like 2021,” said Mr. Phan Dung Khanh.
In the context of major central banks in the world raising interest rates, the State Bank of Vietnam has just reduced a series of operating interest rate.
Standing Deputy Governor of the State Bank Dao Minh Tu said that although he realized that there were still many difficulties due to the financial policies and interest rates of countries including the US, the economy also showed positive signals. In controlling inflation and the Government is implementing synchronously, drastically and effectively policies, the State Bank finds that monetary policy management can continue to be flexible, in the immediate future reducing some interest rates. onion. This decision is intended to send a message to commercial banks reduce loan interest rate For now. Thereby, reducing borrowing costs, creating conditions for businesses to overcome difficulties and quickly recover, especially in the dynamic field of the economy.
“In the past time, banks have also tried to reduce operating costs to have more resources to reduce lending interest rates to support businesses. And on the basis that the State Bank lowers the operating interest rate, banks can continue to reduce lending interest rates in the near future,” said Deputy Governor Dao Minh Tu.
Exchange rate support in 2023
Despite high inflation in the US, with the Fed and other major central banks raising interest rates and the Fed’s quantitative tightening program, experts expect Vietnam’s CPI in 2023 to increase in the range of 3 2%-4.5% is within the Government’s 4.5% target.
In addition, the liquidity of the banking system will remain at the current level to support VND from the State Bank. However, due to the low demand for loan capital (due to higher interest rates than the economy’s demand) and the abundant source of USD pouring into Vietnam, helping to support the exchange rate as well as the liquidity of the banking system. Experts expect interbank interest rates to be kept low in the near future.
Besides, experts expect that the State Bank may try to maintain the current operating policy with a reasonable operating interest rate to support economic development. However, in the worst case (inflation continues to remain high in the US), the State Bank can gradually increase the operating interest rate (especially the refinancing rate) by 0.5%-1 % for the whole year of 2023 to help ensure the target of exchange rate stability.
ACBS experts also believe that the downward pressure on Vietnam dong will be low in 2023 because of 4 factors.
Firstly, the recent weakening of the USD has contributed to the strong VND. This trend is expected to continue as the FED is expected to slow down the rate hike in 2023 and possibly stop raising interest rates in the second half of 2023.
Second, disbursed FDI is expected to continue to grow strongly as Vietnam remains a low-cost producer, stable macroeconomics and more competitive labor costs in the region. This may be attractive to businesses FDI invest and set up a factory, bringing more USD to Vietnam.
Third, the strong recovery of the service industry, especially from international tourism, is also a supporting factor for foreign capital flows.
Finally, the International Monetary Fund’s (IMF) latest economic forecast has revised global GDP growth in 2023 to 2.9%, from the 2.7% forecast in October 2022. As a result, exports, one of Vietnam’s main sources of USD, could remain positive in 2023, although the growth rate may be adjusted.
In general, ACBS experts forecast that VND may appreciate slightly in the second half of 2023.
