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Illustration. Internet

Vietnam is "peaceful"

In February, the Covid-19 epidemic spread to many countries, investor sentiment became more and more anxious. Investors continuously sold off or bought in many main channels. Psychological fear of risk has caused gold prices to rise to nearly $1,700 an ounce - apeak in the lastseven years.While the USD Index measures the strength of the dollar againstsix major world currencies,it also inched up to nearly 100 points – the highest level since April 2017. Even in many sessions, both the gold price and USD price increased and decreased sharply, in contrast with the rule of USD increase, gold decreased or vice versa, as usual.

In the domestic market, the "strongest fluctuation" is the gold price when increasing and decreasing continuously. In the days near the end of February, there was a session witnessing the price of gold increasingnearly VND 2 million, but then dropped sharply. These fluctuations caused gold buyers to suffer losses or profits of up to severalmillion VND in just a few days. In March, the more intense the disease,the more unexpected and unpredictable the gold price is. According to financial expertTS. Nguyen Tri Hieu, as a rule, in crises from epidemics to geopolitics, investors are always looking for gold to increase their holdings as a safe asset. However, this movement may also be due to investors taking advantage of the price, pushing up the profit in the gold market, causing the gold price to increase rapidly but suddenly reducing due to investors taking profits.

Contrary to the evolution of domestic gold prices, the foreign exchange rate is more stable. According to calculations by experts of SSI Securities Company, before the rise of the USD, many currencies of Asian and emerging countries have dropped sharply. From the beginning of 2020 to the end of February, the Russian ruble has decreased by 7.92%, the Thai baht has decreased by 5.97%, the Korean Won has decreased by 3.82%compared to the same period last year, whileVietnam still maintains stability. Accordingly, as of mid-March, the central rate of Vietnam increased by VND72, equivalent to 0.3%compared to the beginning of the year; USD exchange rate at commercial banks also increased by only 0.3%.

Considering daily movements, the USD exchange rate at domestic commercial banks since the beginning of the year until now has been stable if the increase or decrease is in slight amplitude.Experts also said that the exchange rate is basically only recovering after a decline in 2019. The cause of support for the domestic exchange rate is the import and export turnover of Vietnam in the past two months that also increases despite the risk of the Covid-19 epidemic, the trade balance in February was estimated at a surplus of USD100 million; FDI disbursement in February is USD850 million, accumulated in two months is USD2.45 billion. In addition, with the current foreign exchange reserves at a record level, the operator is fully capable of intervening if the market fluctuates, making speculators "depressed" for the USD in Vietnam.

Still concerned about volatility

With the current foreign exchange market, the supply and demand of foreign currencies in the country are still in a stable state, but the cautiousness increases, showing the difference between the buying and selling exchange rates of commercial banks, between the exchange rate andthe bank rate is wide. Besides, the monetary easing policies of many countries, most recently the Federal Reserve (Fed) continue to cut the benchmark interest rate by 1 percentage point to near zero will cause the USD on the international market to cool down, at the same time, it would reduce the domestic USD interest rates, widen the gap between VND and USD interest rates in the interbank market.

According to SSI experts, the pressure of exchange rate may increase if the disease continues to worsen. But in the long term, the tools to support the exchange rate stabilization still have a lot of spare ground and so there is no basis to worry about the devaluation of the VND. Therefore, many experts asserted that the exchange rate of 2020 would still be under the control of the governing body and that the exchange ratewill only fluctuate around 1-2 percent.

As for gold price, because domestic gold price fluctuates continuously according to the world gold price, the future situation is always a big question. TS Nguyen Tri Hieu said that whether the world gold price goes up to USD 2,000/ounce, it will depend greatly on countries not processing Covid-19 at any rate. The more volatile, the more we cannot predict how the price of gold will evolve.

However, it is praiseworthy that the domestic market does not have much disturbance despite the sharp fluctuations in gold prices.There is no phenomenon of people rushing to buy gold to hoard. This mentality is due to the drastic management of the regulator. The representative of the State Bank said that solutions to manage the gold market in the spirit of Decree 24/2012 / ND-CP dated April 3, 2012 of the Government on the management of gold trading activities.Recently, the gold market has stabilized, there is no speculation, causing prices to destabilize the economy; the "goldenization" of the economy has been gradually prevented, the use of gold as a means of payment has been controlled. Therefore, like the foreign exchange market, the agency also affirmed that it had sufficient resources to intervene in the market when necessary. Therefore, the domestic monetary market can be maintained, contributing to the "dual goal" of economic stability and fighting against epidemics set by the Government.