The State Bank of Vietnam has purchased USD4.8 billion since the beginning of the year, Governor Nguyen Van Giau has revealed.
A report by the Government, sent to National Assembly deputies who are meeting today and which did not state when the dollars were purchased, said there had been an improvement in national foreign reserves since the beginning of the year.
Last June, Giau said: "Foreign reserves have increased sharply over the past two months."
Early last month, the International Monetary Fund at the Consulative Group Meeting highly appraised the Vietnamese Government\'s efforts to stabilise the foreign exchange market.
It estimated that the country\'s foreign currency reserves had reached USD13.5 billion. However, that sum is equivalent to 1.5 months of imports, while the World Bank (WB) warned reserves should cover at least 2.5 months.
Vietnam\'s foreign reserves slid from nearly USD24 billion at the end of 2008 to just USD12 billion – equivalent to nine months of imports, a number of foreign financial institutions estimated earlier this year.
While the central bank managed to improve foreign reserve levels, experts were concerned that vast amounts of Vietnamese dong had been used to buy billions of USD, putting more pressure on the soaring consumer price index.
But Giau said the central bank had utilised a number of methods to inject and withdraw money into and out of the market, without creating additional inflationary pressure.
In the first two weeks of July, the State Bank withdrew a net figure of VND8.155 trillion (USD394.53 million) via open market operations (OMO). Data from foreign institutions showed that from July 11 and 15 the central bank\'s withdrew a net figure of VND9 trillion (USD435.41 million). After one week of injecting a net amount of VND945 billion (USD45.71 million), the central bank returned to net withdrawal via OMO.
During that period, there were only six tender sessions, down from the usual 10 auctions per week. Just VND7 trillion (USD338.65 million) money was pumped into the market in the period, while VND16 trillion (USD774 million) was withdrawn the previous week.
