A series of banks have made big profits in foreign exchange trading

According to data from the General Statistics Office, from the end of 2023 to the end of June 2024, the USD/VND exchange rate tends to increase quite strongly. On average, in the first 6 months of 2024, the USD/VND exchange rate increased by 5.64%. Taking advantage of the strong increase in exchange rates, foreign currency trading activities are bustling.

In the financial statements summarizing the first 6 months of 2024 just announced by a series of banks, the foreign exchange business segment brought in large profits, growing strongly compared to previous periods.

At BIDV, in the first half of this year, foreign exchange trading activities brought the bank a net profit of VND3,191 billion, more than double compared to the same period last year. Similarly, at LPBank, foreign exchange trading profit reached nearly VND193 billion, up 17.5% compared to the same period last year.

At Agribank, in the first 6 months of 2024, the foreign exchange business segment had a profit of VND 2,029 billion, an increase of 60% over the same period. Or like Techcombank, the net profit from foreign exchange trading activities in the second quarter of 2024 also reached more than VND 411 billion, while in the same period, it lost VND 11 billion. In addition, some names recorded profits from this business segment such as MB, ACB, HDBank, ABBank, VietABank...

What will the exchange rate be like in the second half of the year?

According to the latest macro report, MBS Securities Company believes that exchange rate pressure will cool down and fluctuate between 25,300 - 25,700 VND/USD in the second half of 2024.

MBS's analysis team said that there are positive factors affecting the exchange rate such as: Positive trade surplus (nearly 10 billion USD in the first 6 months of 2024), FDI inflows (10.8 billion USD, up 8.2% over the same period) and strong recovery of tourism (up 58% over the same period in the first 6 months of 2024).

Sharing the same view, Dragon Viet Securities Joint Stock Company (VDSC) said that there is a basis for the USD not to continue to escalate in the second half of 2024. "Although concerns about risks still exist in the second half of 2024, the USD is forecast to stabilize in the world market, especially the US market," the analysis group said.

Regarding this issue, Dr. Nguyen Tri Hieu - economic expert - said: "With the results achieved in the first half of 2024, Vietnam's economic outlook will continue to be positive for the second half of the year if the FED decides to lower interest rates, reducing pressure on the USD/VND exchange rate, inflation and positively impacting other macro balances. On the contrary, if the FED, under pressure from the Republican Party, postpones the interest rate cut, many disadvantages for the Vietnamese economy are forecast, including an increase in exchange rates and inflation and adverse impacts on foreign investment".

Implementing loose monetary policy in Vietnam will increase exchange rate risks.

MSc. Le Vu Thanh Tam - Institute of Economics and Finance - said that interest rates and market exchange rates have a reciprocal relationship and are affected by many intertwined factors, especially in the context of international economic integration.

To operate the exchange rate flexibly and stabilize the foreign exchange market, according to Master Tam, in the short term, the State Bank can use the exchange rate policy (buying and selling foreign currencies in trading sessions on the interbank foreign exchange market), apply the policy of limited foreign exchange interest rates, central exchange rates and margins along with a number of other tools. Continue to complete the interbank foreign exchange market, so that the State Bank can grasp the supply and demand relationship of foreign currencies, and at the same time implement intervention measures when necessary.

In the immediate future, it is necessary to have measures to encourage foreign currency trading banks to participate in the interbank foreign currency market, while at the same time consolidating and developing the interbank domestic currency market with full range of operations, creating conditions for the State Bank to coordinate and regulate between the two areas of the domestic currency market and the foreign currency market in a transparent manner.

In addition, the Operator needs to strengthen communication work to stabilize market sentiment, especially during volatile periods to stabilize sentiment in the foreign exchange market, thereby enhancing the prestige of monetary policy management, increasing the ability to orient and lead the foreign exchange market.

MSc. Le Thi Bich Ngoc - Academy of Finance - proposed that the State Bank should continue to implement multi-target monetary policy, because it is suitable for Vietnam's reality.

Second, there needs to be an accurate and timely policy response, but the dosage and level of exchange rate and interest rate adjustments should not create macroeconomic shocks, destabilize the financial market and business production activities of enterprises.

Third, it is necessary to promptly update and announce the basic interest rate in accordance with the practical situation in Vietnam, so that the basic interest rate can properly perform its role and meaning in the field of financial and monetary policy management.