A Number of Banks Earn Large Profits from Foreign Exchange Business
According to data from General Statistics Office, from the end of 2023 to the end of June 2024, the exchange rate of USD/VND has shown a strong upward trend. The average exchange rate of USD/VND in the first six months of 2024 increased by 5.64%. Taking advantage of the strong upward trend in the exchange rate, foreign exchange transactions have been very active.
In the consolidated financial reports of a number of banks released recently, the foreign exchange business segment has brought in large profits, with strong growth compared to previous periods.
At BIDV, as of the first half of this year, the foreign exchange business has brought in a net profit of 3.191 trillion VND, more than double the same period last year. Similarly, at LPBank, profits from foreign exchange business reached nearly 193 trillion VND, up 17.5% from the same period last year.
At Agribank, in the first six months of 2024, the foreign exchange business segment earned a profit of 2.029 trillion VND, up 60% from the same period last year. Similarly, Techcombank's net profit from foreign exchange business in the second quarter of 2024 also reached over 411 trillion VND, while the same period last year it incurred a loss of 11 trillion VND. In addition, some other banks have also recorded profits from this business segment, such as MB, ACB, HDBank, ABBank, VietABank...
What will the exchange rate be in the second half of the year?
According to the latest macroeconomic report, MBS Securities Company believes that the pressure on the exchange rate will ease and fluctuate in the range of 25,300 - 25,700 VND/USD in the second half of 2024.
MBS's analysis team pointed out that there are positive factors affecting the exchange rate, including: a trade surplus of nearly 10 billion USD in the first six months of 2024, a 10.8 billion USD increase in foreign direct investment (up 8.2% from the same period last year), and a strong recovery in tourism (up 58% from the same period last year in the first six months of 2024).
Similarly, VDSC Securities Company also believes that there is a basis for the US dollar not to continue to rise in the second half of 2024. "Although concerns about risks still exist in the second half of 2024, the US dollar is expected to remain stable on the global market, especially in the US market" - the analysis team said.
Regarding this issue, Dr. Nguyen Tri Hieu - an economist - pointed out: "With the results achieved in the first half of 2024, Vietnam's economic prospects will continue to be favorable in the second half of the year if the FED decides to lower interest rates, reducing pressure on the exchange rate of USD/VND, inflation, and other macroeconomic balances. On the other hand, if the FED is pressured by the Republican Party to delay interest rate cuts, many disadvantages are expected for Vietnam's economy, including rising exchange rates and inflation, and negative impacts on foreign investment".
Implementing monetary policy relaxation in Vietnam will increase the risk of exchange rate fluctuations
Ms. Le Vu Thanh Tam - Institute of Economics and Finance - pointed out that interest rates and exchange rates have a reciprocal relationship, and are also affected by many intertwined factors, especially in the context of international economic integration.
To flexibly manage the exchange rate and stabilize the foreign exchange market, according to Ms. Tam, in the short term, the State Bank of Vietnam can use foreign exchange policy (buying and selling foreign exchange in interbank foreign exchange transactions), apply foreign exchange interest rate limits, central exchange rates, and other tools. Continue to complete the interbank foreign exchange market, so that the State Bank of Vietnam can grasp the relationship between supply and demand for foreign exchange, and implement intervention measures as needed.
Meanwhile, it is necessary to take measures to encourage commercial banks to participate in the interbank foreign exchange market, and to strengthen and develop the interbank domestic currency market with full operational activities, creating conditions for the State Bank of Vietnam to coordinate and balance between the two markets.
In addition, the management agency needs to strengthen communication to stabilize market sentiment, especially during periods of volatility, to stabilize market sentiment in the foreign exchange market, thereby enhancing the credibility of monetary policy management, increasing the ability to guide and lead the foreign exchange market.
Ms. Le Thi Bich Ngoc - Finance Academy - proposed that the State Bank of Vietnam should continue to implement multi-objective monetary policy management, which is suitable for Vietnam's practice.
Secondly, it is necessary to have a timely and accurate policy response, but with a moderate dosage and adjustment level of exchange rates and interest rates, not creating economic shocks and instability in the financial market and production and business activities of enterprises.
Thirdly, it is necessary to update and publicly announce interest rates in a timely manner, in line with Vietnam's practical situation, so that the basic interest rate plays its role and significance in the field of financial and monetary policy management.
