30
May
Indicators in May seem to characterize a turnaround in Vietnam’s economy when export and production activities experienced significant improvements. In addition, domestic consumption sustains its strong growth with well-controlled inflation, adding confidence about the bright economic picture soon. May also reveals a better situation in foreign investment when the global rate hike seems to step into the end phase.
23
May
The money market witnessed another uneventful week with minimal fluctuations in interbank rates, G-bond yields, and the USDVND exchange rate. Although this week marked the beginning of a wave of T-bill maturities, the overnight (ON) interbank rate experienced a slight decline. Banks tend to refrain from reinvesting the maturing T-bills, leading to soft liquidity pressure in the upcoming weeks. Turning to the FX market, the exchange rate remained steady, supported by a strong trade surplus despite a notable recovery in DXY. The stability in the FX market will provide SBV with room to implement future easing measures.
16
May
The liquidity condition generally improves after the holiday with lower interest rates for short-term loans and increased traded value, and G-bond yields tend to reduce for first and second markets. The development in the money market continues to reflect the government’s efforts in promoting credit activities to support domestic enterprises after the economy experienced a depressed performance in the first quarter. Furthermore, USDVND remains stable in the late phase of the Fed's rate hike, providing Vietnam’s monetary authority more confidence to follow easing decisions.
09
May
Vietnam's money market this week shows a modest but implicit move even just with two trading days. On one hand, interbank rates tend to increase when the liquidity condition seems to need more time to stabilize after a long holiday. On the other hand, USDVND is flat although one more 25bps increase in the Fed fund rate was released. Furthermore, the 10-year G-bond yield declined for the fourth consecutive week although. Therefore, we predict that participants might await more easing signals from the monetary authority after a depressed set of economic indicators for April.
08
May
April shows the adverse impact of weak global demand, under the high-interest rate environment, on Vietnam's economy was still effective. Export decline persists this month, even with a higher rate than in March under the weak 1Q23 revenue from GVC leaders whose factories were heavily located in Vietnam, such as Samsung Electronics. Furthermore, industrial production grows modestly from reducing significantly in the previous month due to the robust domestic demand. On the upside, inflation continued to be well-controlled and retail sales performed impressively, providing support for economic growth in 2Q23.
05
May
High liquidity demand for a long holiday characterized this week while G-bond and FX markets witnessed slight moves. Interbank rates, especially for short-term tenors, increased significantly and with a 2.5 time-higher in trading value on Friday. In the opposite direction, FX and G-bond markets saw trivial changes with a 0.13% decrease in USDVND and a 7bps-decrease in 10-year G-bond heading to the May FOMC meeting. We expect the liquidity pressure to ease after the holiday and interbank rates to cool down next week.
25
April
Liquidity pressure in the money market cooled down this week when the short-term mismatch in the TGA auction was partly resolved. On the other hand, 10-year G-bond yield and average deposit rates from SOBs were mainly unchanged after reducing significantly a few weeks ago, implying that the impact of recent policy rate cuts was fading and market participants likely await more signals from Vietnam’s central bank. Besides, USDVND has rebounded slightly when hitting SBV’s buying level.
18
April
Liquidity condition in the money market remains tight this week under the upcoming long holiday and possible mismatch in the auction of TGA deposits. Oppositely, interest rates on longer-term assets declined further following the recent SBV’s easing. 10-year G-bond yield returned to reduce by 8bps this week, and average deposit rates from SOBs were unchanged. Besides, the forex market experienced a calm week when USDVND hit SBV’s buying level.
11
April
The money market is in the early stage of the potential reversal of the first lending market after two rounds of policy rate cuts SBV delivered in March-mid. Accordingly, deposit rates have declined for mid-term tenors (from one month to below six months). This development could facilitate commercial banks to lower lending rates, causing lending activities to improve next month. As per liquidity condition, the overnight interbank rate surged this week, likely attributed to the potential mismatch between depositors and banks in the first stage of interest rate reversal and increasing demand for reserves in the upcoming long holiday.
15
March
Regarding the impact of the global commodity price surge on Vietnam CPI, we estimate that the current value of Brent price could push 2022 inflation to exceed the government target of 4%, mainly through the consumption channel. However, implementing well-established tools allows the Vietnam government to mitigate external shocks proactively. To sum up, we forecast that the global commodity surge would create temporary pressure on Vietnam inflation.
27
December
Key factors that drive the stock market to rise in 2022 include: (1) the Vietnam economy recovering and strong growth in 2022 and (2) new money will continue to flow into the stock market as new cash flows into stock markets and new money comes from capital flows of securities companies to margin.
09
November
A record plunge in Vietnam’s economy in 3Q21 has threatened economic prospects in the medium and long term growth. The government is standing in a right place to mitigate the lingering impact of the current outbreak and the next ones if they take appropriate actions in an appropriate timing and appropriate way. Recent macro and policy developments are signaling that the ongoing economic recovery would be smooth and sound, but it needs a booster shot, a sufficiently large fiscal relief package, to accelerate recovery momentum and help economic growth back on track. From our view, the “Economic Recovery and Development” fiscal support package, if successfully passed, would be a key to unlocking the full potential of the economic recovery.
26
July
Amid a widespread COVID-19 delta attack in the Southeast Asia region, Vietnam is stepping into the worst outbreak in both its health and economic impacts. Although the government actively deployed various solutions to follow the twin target that effectively controls the pandemic and promotes socio-economic development, the negative impact of economic recovery is inevitable. We predict that the COVID-19 economic impacts on domestic consumption and production levels would be partly reflected in oncoming macroeconomic updates under strict lockdowns nationwide.
18
June
Surging commodity prices and increasing inflation recently pose a considerable risk to global economic stability. However, the majority of global economists and monetary policymakers just saw this phenomenon as a transitory factor, and this trend would eventually reverse to a normal track in the medium- and long- term. Regarding Vietnam's situation, we saw a stable demand-supply balance in major commodities and well-controlled price conditions. The inflation shock in the near term, if it happens, would be expected to be transient and bear a little risk to the economic stability.
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