The State Bank of Vietnam reportedly sold US$2 billion worth of US dollars last week in order to keep the dong from devaluing, according to Nguyen Duc Khang, Head of Analysis at Pinetree Securities Company and reported by Dau Tu Online. This would reduce the bank’s current foreign exchange holdings to around US$82 billion about two-and-a-half months’ worth of imports which is concerning in that the IMF recommends countries hold enough to cover about three.
Of note, Khang is also quoted as saying that the SBV holds a sizable amount of its reserves in US Treasury bills and that if the SBV doesn’t want to sell these at a loss it can only really sell around US$12 to US$14 billion worth of its current reserves.
For some additional context, Hai Quan Online is carrying comments from several key economists with Tim Leelahaphan from Standard Chartered advising the firm is expecting a .5 percent increase in interest rates next year, and Michael Kokalari from VinaCapital predicting a 3 percent decline for the dong next year.