Forex rates need to be adjusted: experts
Experts have urged the central bank to apply the crawling peg - an exchange rate regime that allows depreciation or appreciation to happen gradually - to help firms develop appropriate business plans.
At a conference organized by the Academy of Finance's Institute of Economics and Finance on April 15, the stronger dollar in the world's financial market and the recent rise in the VND-USD exchange rate in the unofficial market was discussed.
Although, the State Bank of Vietnam at the end of last month had committed to keeping the exchange rate stable, the institute's Deputy Director Nguyen Duc Do, said at the conference that the market was awaiting an adjustment from the central bank, given the rising dollar rates against many other major currencies.
Do said the crawling peg regime would be helpful for the economy, where the export potential remained large, adding that this would help firms, especially export firms in foreseeing forex adjustment and develop appropriate business plans.
He added that if a crawling peg was applied, a cap on exchange rate adjustments for a year would become necessary.
According to Le Quoc Phuong, deputy director of the Vietnam Trade and Industry Information Centre under the Ministry of Industry and Trade, a crawling peg could save the market from possible shocks arising from a huge exchange rate adjustment at one time. In addition, if the exchange rate was kept stable longer term, this might result in speculation.
Phuong stressed that the exchange rate should be adjusted more regularly with mild adjustments that prevent market shocks.
The Vietnamese dong was devalued by 1% from VND21,246 to VND21,458 against the US dollar in January, the first exchange rate adjustment since 2013.
The central bank had pledged that the forex rate would be adjusted by no more than 2% this year.