VIETNAM - VN forex reserves predicted to top $15.8 bln

by lexie Thu Jan 05, 2012 3:17 pm

January 5, 2012

VN forex reserves predicted to top $15.8 bln

Vietnam’s foreign reserves this year will reach US$15.81 billion from the $12.56 billion recorded last year, forecasted JPMorgan Chase Bank in its recent report on the country’s macro-economy.

“Despite the surge, the country’s forex reserve still remains at a low rate, equal to only 1.5 months of imports,” the report stated.

If the country’s inflation cools down as predicted, the reserves will rise as local people will switch to depositing in their local currency, said the global financial services firm.

JPMorgan experts also said that Vietnam’s economy this year is likely to reach a higher level of stability than last year, and it is inflation that exerts the strongest impact on the balance of payment, rather than the trade deficit.

Vietnam is estimated to enjoy a balance of payment surplus of $1.8 billion in 2011, JPMorgan said, predicting the figure to amount to $3.25 billion this year.

“With the country’s inflation expected to decelerate, and the government prioritizing economic stabilization rather than the ‘grow at all costs’ policy, it is expected that the basic economic factors of Vietnam will be improved,” the report said.

However, the bank said bank asset quality still remains a major threat to the country’s economy, though it is not likely that the banking sector will be hit by a crisis.

In 2012, foreign direct investment (FDI) to the country is expected to reach $10.5 billion, and foreign indirect investment (FII) will rise to $500 million from negative $5.6 billion in 2011, JPMorgan predicted.

http://www.vietfinancenews.com/2012/01/vn-forex-reserves-predicted-to-top-158.html