HSBC Weekly Market Update

HSBC

Wednesday, 27 Apr 2016

USDVND stabilized around 22300 

The USDVND opened last Tuesday at 22310 and gradually eased down to below 22300 for the rest of the week. Inflows continued to be strong while VND cost of funds remained high has limited any upside potential for the pair. It is said that the SBV continued to buy in large amount of USD for FX reserves. 

According to Vietnam Customs, in the first half of April 2016, goods export and import turnover were USD7.34 bln and USD7.27 bln respectively. Therefore, Vietnam continued to record a trade surplus of USD70 mln for the period. Year-to-date, Vietnam exported USD46.1 bln and imported USD44.6 bln in goods, trade surplus was USD1.48 bln. 

Easing VND rates 

There were some mild drops in short term VND rates at the last week of the month, although concerns over system liquidity before the long holiday were still persistent. As the banking system will be closed on 2 and 3 May 2016, it is expected that their customers will want to settle their financial obligations before the holiday. On 25Apr16, the average offered rates by major local banks were at 4.83 for ON (down 12bps compared to one week before), 4.85 for 1W (down 13bps), and 5.00 for 1M (down 8bps). 

Recent CPI figure for April was released at +0.33% MoM, or +1.89% YoY. 

Banks had to pay back around VND 21.188 Trio to the central over last week via the Open Markets. At the same time, they borrowed VND 35.300 Trio via this channel. 

For more details, please see attached file.