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8/7/2019 ANZ Vietnam Economics Chartbook - Feb 2011
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15 FEBRUARY 2011
CONTRIBUTORS
Hai Pham
Analyst, Mekong Economics+65 6216 [email protected]
Paul Gruenwald
Chief Economist, Asia+65 6216 1814
[email protected]
VIETNAM MONTHLY CHARTBOOK
ECONOMICS & GLOBAL MARKETS RESEARCH
THE DONG WAS DEVALUED, INTEREST RATES ARE RISING,AND INFLATION
IS SURGING.
The Vietnamese dong was devalued by 9.3% on 11 Feb, and
thetrading band was narrowed to +/- 1% from +/-3%.
CPI inflation climbed to 12.2% (y/y) in Jan and is likely to
riseagain in Feb.
The central bank left the policy rate unchanged in Jan,
butincreased its 7-day reverse repo rate to 11.0%. Real interest
ratesremained in negative territory.
Jans trade deficit narrowed to $1bn as both import and
exportgrowth fell. The dongs devaluation will help exports, but
will addto existing price pressures. This heightened the problem of
erodingconfidence in the dong and put the dong under pressures
todepreciate further. Therefore, we underscore the need for
further
interest rate hikes.
CHARTS OF THE MONTH
Vietnam - Exchange Rates
18
19
20
21
22
23
24
Jan
10
Feb
10
Mar
10
Apr
10
May
10
Jun
10
Aug
10
Sep
10
Oct
10
Nov
10
Dec
10
Feb
11
Thousands
1M NDF 12M NDF USD-VND
Vietnam - Interest Rates
(% pa)
6
7
8
9
10
11
12
13
Jan
10
Feb
10
Mar
10
Apr
10
May
10
Jun
10
Aug
10
Sep
10
Oct
10
Nov
10
Dec
10
Feb
11
O/N Interbank deposit rate
SBV 7-day reverse repo rate
SBV Policy Rate
Vietnam - Inflation
-10
0
10
20
30
40
Jan
08
Apr
08
Jul
08
Oct
08
Jan
09
Apr
09
Jul
09
Oct
09
Jan
10
Apr
10
Jul
10
Oct
10
Jan
11
-1
0
1
2
3
4
C PI y/y C PI 3m/3m, saar C PI m/m (RHS)
Vietnam - Trade Developments
-100
-75
-50
-25
0
25
50
75
100
Jan
08
Apr
08
Jul
08
Oct
08
Jan
09
Apr
09
Jul
09
Oct
09
Jan
10
Apr
10
Jul
10
Oct
10
Jan
11
-3
-2
-1
0
1
2
3
Trade Balance $bn (RHS) Imports y/y Exports y/y
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ANZ Vietnam Monthly Chartbook / 15 February 2011 / 2 of 11
INDUSTRIAL P RODUCTION: GARMENT OUTPUT PULLED DOWN
Industrial production grew 16.8% (y/y) in Jan, up from 14.0% in
Dec 2010. The domestic non-statesector led growth again, rising
22.6% from 22.3% in Dec. Meanwhile, growth in the foreign
invested(FDI) sector fell to 18.1% from 18.4% previously.
On a monthly basis, Jan industrial production fell 2.0%,
compared with a 2.9% gain in Dec 2010. The fallwas driven by a
22.0% decline in ready-made garments. Growth momentum also declined
to15.7% (3m/3m, saar) from 17.7% in the previous month.
Growth in coal production (y/y, 3mma) was again negative, but
crude oil production growth increased to9.2% from 7.4% in Dec.
Vietnam - Industrial Production
-20
-10
0
10
20
30
40
Jan
08
Apr
08
Jul
08
Oct
08
Jan
09
Apr
09
Jul
09
Oct
09
Jan
10
Apr
10
Jul
10
Oct
10
Jan
11
-40
-20
0
20
40
60
80
ytd y/y y/y 3m/3m, saar (RHS)
Vietnam - Industrial Production by Sector
(y/y)
-30
-15
0
15
30
45
60
75
90
Jan
08
Apr
08
Jul
08
Oct
08
Jan
09
Apr
09
Jul
09
Oct
09
Jan
10
Apr
10
Jul
10
Oct
10
Jan
11
State Non-State Foreign Invested
Vietnam - Industrial Production -Mining and
Quarrying
(y/y, 3mma)
-30
-20
-10
0
10
20
30
40
50
Jan
08
Apr
08
Jul
08
Oct
08
Jan
09
Apr
09
Jul
09
Oct
09
Jan
10
Apr
10
Jul
10
Oct
10
Jan
11
Coal Crude Oil
Vietnam - Industrial Production- Manufacturing
(y/y, 3mma)
-40
-20
0
20
40
60
80
Jan
08
Apr
08
Jul
08
Oct
08
Jan
09
Apr
09
Jul
09
Oct
09
Jan
10
Apr
10
Jul
10
Oct
10
Jan
11
Chemical Fertilizers Garments Steel Cement
GOVERNMENT CAPI TAL INVESTMENT: LOCAL GOVERNMENTS SPENT MORE
State investment increased 44.9% (y/y) in Jan, as local
government spending surged by 60.0% fromDec. However, on a momentum
basis, state investment growth continued to be negative.
Vietnam - State Investment
-70
-35
0
35
70
105
140
175
210
Jan08 Apr08 Jul08 Oct08 Jan09 Apr09 Jul09 Oct09 Jan10 Apr10
Jul10 Oct10 Jan11
-140
0
140
280
420
y/y y/y, 3mma 3m/3m, saar (RHS)
Vietnam - State Inv estment by Ministry
(VND bn)
-700
0
700
1400
2100
2800
3500
Jan
08
Apr
08
Jul
08
Oct
08
Jan
09
Apr
09
Jul
09
Oct
09
Jan
10
Apr
10
Jul
10
Oct
10
Jan
11
-60
0
60
120
180
240
300
Industry Agriculture & Rural Dev
Transport Total (y/y - RHS)
Sources: CEIC, ANZ Economics
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ANZ Vietnam Monthly Chartbook / 15 February 2011/ 3 of 11
CONSUMPTI ON: DEMAND WAS UP AHEAD OF THE TET HOLIDAYS
Retail sales grew 22.1% (y/y) in Jan, up from 11.6% in Dec, as
demand rose prior to the Tet holidays.Retail sales in trade climbed
21.9% and contributed 17.3% to total y/y sales growth. Sales in
hotels andrestaurants jumped 22.0%, while services and tourism
sales surged by 22.0%.
Spending in the dominant domestic sector jumped 26.5% (y/y,
3mma) from 17.7% in Dec. Conversely,growth in the volatile FDI
sector fell to 13.6% in Jan from 27.8% previously.
On a momentum basis, Jan retail sales growth rebounded to 1.7%
(3m/3m, saar), from a decline of3.8% previously, as trade sale
momentum improved. Momentum in hotels, restaurants and services
fell.
Retail sales growth in Ho Chi Minh City edged up to 18.6%
(y/y).
Vietnam - Retail Sales
(y/y)
-60
-40
-20
0
20
40
60
80
100
120
Jan
08
Apr
08
Jul
08
Oct
08
Jan
09
Apr
09
Jul
09
Oct
09
Jan
10
Apr
10
Jul
10
Oct
10
Jan
11
-25
-15
-5
5
15
25
35
45
Domestic
Foreign InvestedTotal Retail Sales (RHS)
Vietnam - Domestic Retail Sales by Sector
(y/y, 3mma)
-10
0
10
20
30
40
50
60
70
Jan
08
Apr
08
Jul
08
Oct
08
Jan
09
Apr
09
Jul
09
Oct
09
Jan
10
Apr
10
Jul
10
Oct
10
Jan
11
State Private Household
Vietnam - Retai l Sales by Industry
(y/y, 3mma)
-5
5
15
25
35
45
Jan
08
Apr
08
Jul
08
Oct
08
Jan
09
Apr
09
Jul
09
Oct
09
Jan
10
Apr
10
Jul
10
Oct
10
Jan
11
-20
20
60
100
140
180
Trade Hotels and Restaurants Services and Tourism (RHS)
Vietnam - Retail Sales by Industry
(3m/3m, saar)
-15
0
15
30
45
60
75
90
Jan
08
Apr
08
Jul
08
Oct
08
Jan
09
Apr
09
Jul
09
Oct
09
Jan
10
Apr
10
Jul
10
Oct
10
Jan
11
-150
0
150
300
450
600
750
900
Trade Hotels and Restaurants Services and Tourism (RHS)
Vietnam - Automobi le Imports and Sales(m/m)
-90
-60
-30
0
30
60
90
120
150
180
Jan
08
Apr
08
Jul
08
Oct
08
Jan
09
Apr
09
Jul
09
Oct
09
Jan
10
Apr
10
Jul
10
Oct
10
Jan
11
-9
-6
-3
0
3
6
9
12
15
18
Thousands
Sales, units (RHS) Sales Imports
Vietnam - Retail Sales Gro wth by City(m/m)
-20
-10
0
10
20
30
40
Jan
08
Apr
08
Jul
08
Oct
08
Jan
09
Apr
09
Jul
09
Oct
09
Jan
10
Apr
10
Jul
10
Oct
10
Jan
11
Hanoi Ho Chi Minh City
Sources: CEIC, ANZ Economics
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ANZ Vietnam Monthly Chartbook / 15 February 2011/ 4 of 11
INVESTMENT: FOREIGN INFLOWS SLOWED IN JAN
Registered FDI inflows fell to $182mn in Jan, a mere 15.6% of
the previous Jans total inflows. Theauthorities are aiming to
attract $20bn in registered FDI this year. Meanwhile, disbursed FDI
also fell to$420mn in Jan, from $1bn in the previous month.
Foreign equity inflows fell by 56.5% (m/m) in Jan to $58mn.
However, the total market value of the HoChi Minh City index
increased by 7.2% (m/m) in Jan to VND636.6bn, compared with a 10.8%
growth inDec last year.
Vietnam - Registere d FDI
(ytd)
-10
0
10
20
30
40
50
60
70
80
Jan
08
Apr
08
Jul
08
Oct
08
Jan
09
Apr
09
Jul
09
Oct
09
Jan
10
Apr
10
Jul
10
Oct
10
Jan
11
-100
0
100
200
300
400
500
600
700
800
$bn
ytd, y/y (RHS)
Vietnam - Registere d FDI
(monthly)
0
50
100
150
200
250
300
350
400
Jan
08
Apr
08
Jul
08
Oct
08
Jan
09
Apr
09
Jul
09
Oct
09
Jan
10
Apr
10
Jul
10
Oct
10
Jan
11
0
2
4
6
810
12
14
16
18
Number of Projects $bn (RHS)
Vietnam - FDI Disbursement
-1.0
-0.5
0.0
0.5
1.0
1.5
2.0
2.5
3.0
Jan
08
Apr
08
Jul
08
Oct
08
Jan
09
Apr
09
Jul
09
Oct
09
Jan
10
Apr
10
Jul
10
Oct
10
Jan
11
-100
-50
0
50
100
150
200
250
300
$bn 3m/3m (RHS)
Vietnam - Investor Confidence Indices
-100
-50
0
50
100
150
200
250
Jan
09
Mar
09
May
09
Jul
09
Sep
09
Nov
09
Jan
10
Mar
10
May
10
Jul
10
Sep
10
Nov
10
Jan
11
Domestic ICI Foreign ICI
DICI y/y FICI y/y
Source: Foreign Investment Agency (MPI), Bloomberg, ANZ
Economics
Vietnam - Equity Mar ket (HCMC)
0
100
200
300
400
500
600
700
800
900
Jan
08
Apr
08
Jul
08
Oct
08
Jan
09
Apr
09
Jul
09
Oct
09
Jan
10
Apr
10
Jul
10
Oct
10
Jan
11
0
20
40
60
80
100
Market Index end of monthMarket Value end of month, VND trn
RHS
Vietnam - Fore ign Equity Inflows and Securities
-120
-80
-40
0
40
80
120
160
Jan
08
Apr
08
Jul
08
Oct
08
Jan
09
Apr
09
Jul
09
Oct
09
Jan
10
Apr
10
Jul
10
Oct
10
Jan
11
200
300
400
500
600
700
800
900
Foreign Equity Inflows $mn VNINDEX (RHS)
Source: CEIC Source: Bloomberg
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ANZ Vietnam Monthly Chartbook / 15 February 2011 / 5 of 11
FOREIGN TRADE: TRADE MOMENTUM SLOWED AND THE TRADE DEFICIT
NARROWED IN JAN
Jan export growth slowed to 19.7% (y/y) from 37.2% in Dec.
Import growth also fell to 17.5%, from18.9% previously.
The trade deficit narrowed to an estimated $1.0bn in Jan from a
downwardly revised $1.3bn in Dec lastyear. Since Apr 2010, exports
have outpaced imports on year-on-year basis. However, on a
momentumbasis, Jans export growth of 25.0% (3m/3m, saar) was lower
than import growth of 55.1%.
The foreign invested sector contributed 6ppts to total export
growth in Jan, versus the domesticsectors 13.7ppt contribution.
Last year the FDI sector contributed 15.8ppts, on average, while
thedomestic sector contributed 11.7ppts to total export growth.
Trade in the domestic sector ran at adeficit of $1.3bn, while the
FDI sector had a surplus of $273mn in Jan.
Vietnam - Trade Developments
-100
-75
-50
-25
0
25
50
75
100
Jan
08
Apr
08
Jul
08
Oct
08
Jan
09
Apr
09
Jul
09
Oct
09
Jan
10
Apr
10
Jul
10
Oct
10
Jan
11
-3
-2
-1
0
1
2
3
Trade Balance $bn (RHS) Imports y/y Exports y/y
Vietnam - For eign Trade by Sector
($bn)
0
1
2
3
4
5
6
7
89
10
Jan
08
Apr
08
Jul
08
Oct
08
Jan
09
Apr
09
Jul
09
Oct
09
Jan
10
Apr
10
Jul
10
Oct
10
Jan
11
Exports- Domestic Exports- Foreign Invested
Imports- Domestic Imports- Foreign Invested
Vietnam - Trade Developments
(y/y 3mma)
-50
-25
0
25
50
75
Jan
08
Apr
08
Jul
08
Oct
08
Jan
09
Apr
09
Jul
09
Oct
09
Jan
10
Apr
10
Jul
10
Oct
10
Jan
11
Exports
Imports
Vietnam - Trade Momentum
(3m/3m, saar)
-100
-50
0
50
100
150
200
Jan
08
Apr
08
Jul
08
Oct
08
Jan
09
Apr
09
Jul
09
Oct
09
Jan
10
Apr
10
Jul
10
Oct
10
Jan
11
Exports
Imports
Vietnam's Tr ade Deficit and Inflat ion
-10
0
10
20
30
40
Jan
08
Apr
08
Jul
08
Oct
08
Jan
09
Apr
09
Jul
09
Oct
09
Jan
10
Apr
10
Jul
10
Oct
10
Jan
11
-10
0
10
20
30
40
CPI 3m/3m, saar Trade Deficit 3m annualised ($bn-RHS)
Vietnam - Trade Balance and FDI Disbursement($bn)
-3
-2
-1
0
1
2
3
Jan
08
Apr
08
Jul
08
Oct
08
Jan
09
Apr
09
Jul
09
Oct
09
Jan
10
Apr
10
Jul
10
Oct
10
Jan
11
Trade Balance FDI Disbursement
Sources: CEIC, ANZ Economics
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ANZ Vietnam Monthly Chartbook / 15 February 2011 / 6 of 11
EXPORTS: JAN GROW TH SLOWED, FOOTWARES LED THE DECLINE
Export growth fell to 19.7% (y/y) in Jan as growth in the
foreign-invested sector decreased. On amonthly basis, exports
decreased by 20.0% (m/m), compared with a 12.9% gain in Dec 2010.
Exportgrowth momentum fell to 25.0% (3m/3m, saar) in Jan, compared
with an increase of 48.4% in Dec.
All major exports fell in Jan on a monthly basis. The largest
decline was in footwear which fell 28.9%. Inline with the recent
slowdown in garment production, Jans textile and garment export
growth fell to26.6% (y/y, 3mma), from 32.5% in the previous month.
However, computer and electronic exportgrowth continued to
increase, up 31.5% in Jan.
Meanwhile, primary export growth (ex-rice) increased. In
particular, crude oil exportgrowth (y/y, 3mma) turned positive for
the first time since Nov 2008.
In terms of destinations, the US continued to be Vietnams most
important export market. However, thegrowth of exports to the US,
about 43% of which are textiles and garments, has declined in
recentmonths. Meanwhile, exports to China and ASEAN, about 30% of
which are crude oil and rice,
grew strongly.
Vietnam - Exports Growth by Sector
(y/y)
-50
-25
0
25
50
75
100
Jan
08
Apr
08
Jul
08
Oct
08
Jan
09
Apr
09
Jul
09
Oct
09
Jan
10
Apr
10
Jul
10
Oct
10
Jan
11
Total
Domestic
Foreign Invested
Vietnam - Exports
($bn)
0.0
0.5
1.0
1.5
2.0
2.5
3.0
3.5
Jan
08
Apr
08
Jul
08
Oct
08
Jan
09
Apr
09
Jul
09
Oct
09
Jan
10
Apr
10
Jul
10
Oct
10
Jan
11
Crude Oil Textiles & Garments Aqua products
Footwares Valuables
Vietnam - Exports- P rimary Products
(y/y, 3mma)
-60
-40
-20
0
20
40
60
80
Jan
08
Apr
08
Jul
08
Oct
08
Jan
09
Apr
09
Jul
09
Oct
09
Jan
10
Apr
10
Jul
10
Oct
10
Jan
11
-240
-160
-80
0
80
160
240
320
C rude Oil Aqua products Rice (RHS)
Vietnam - Exports-Manufactured Products
(y/y, 3mma)
-30
-20
-10
0
10
20
30
40
50
60
Jan
08
Apr
08
Jul
08
Oct
08
Jan
09
Apr
09
Jul
09
Oct
09
Jan
10
Apr
10
Jul
10
Oct
10
Jan
11Texti les and Garments FootwaresComputers and Electronics
Vietnam - Exports by Destination
($bn)
0
1
2
3
4
5
Jan
08
Apr
08
Jul
08
Oct
08
Jan
09
Apr
09
Jul
09
Oct
09
Jan
10
Apr
10
Jul
10
Oct
10
Jan
11
EU US ASEAN China
Vietnam - Exports by Destination
(y/y, 3mma)
-40
-20
0
20
40
60
Jan
08
Apr
08
Jul
08
Oct
08
Jan
09
Apr
09
Jul
09
Oct
09
Jan
10
Apr
10
Jul
10
Oct
10
Jan
11
EU US China ASEAN
Sources: CEIC, GSO, ANZ Economics
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ANZ Vietnam Monthly Chartbook / 15 February 2011 / 7 of 11
IMP ORTS: MACHINERY LED THE DECLINE IN IMPORT GROWTH
Imports grew by 17.5% (y/y) in Jan, down from 18.9% in Dec 2010.
Growth in the domestic sectorincreased to 15.1% from 13.1% in Dec,
while imports into the FDI sector grew by 21.1%, down from
34.4% in the previous month. On a monthly basis, imports fell by
20.4% (m/m), compared with a 5.2%gain in Dec.
Import growth momentum also fell in Jan to 55.1% (3m/3m, saar)
from 62.4% in the previous month.The decline with led by growth in
machinery imports, down by 11.2%, compared with the 13.1%
decline
in Dec; machinery imports account for 16% of total imports.
Contrary to ready-made garment exportmomentum, garment import
momentum rose to 55.7% in Jan from 51.5% in Dec. Petroleum
importsincreased as well.
China continued to be the largest exporter to Vietnam but had
declined since H2 last year. About 22% ofChinese imports are
machinery. Meanwhile, Korean imports increased sharply. Computer
parts and
garments account for about 29% of Korean imports.
Vietnam - Imports by Sectors
(y/y)
-60
-40
-20
0
20
40
60
80
100
Jan
08
Apr
08
Jul
08
Oct
08
Jan
09
Apr
09
Jul
09
Oct
09
Jan
10
Apr
10
Jul
10
Oct
10
Jan
11
TotalDomesticForeign Invested
Vietnam - Imports
($bn)
0.0
0.5
1.0
1.5
2.0
2.5
3.0
3.5
Jan
08
Apr
08
Jul
08
Oct
08
Jan
09
Apr
09
Jul
09
Oct
09
Jan
10
Apr
10
Jul
10
Oct
10
Jan
11
Machinery & Spare Parts Garments Petroleum Steel
Vietnam - Imports
(y/y, 3mma)
-60
-30
0
30
60
90
120
Jan
08
Apr
08
Jul
08
Oct
08
Jan
09
Apr
09
Jul
09
Oct
09
Jan
10
Apr
10
Jul
10
Oct
10
Jan
11
-150
-100
-50
0
50
100
150
200
250
300
Petroleum Chemical Products Steel (RHS)
Vietnam - Imports
(y/y, 3mma)
-40
-20
0
20
40
60
80
Jan
08
Apr
08
Jul
08
Oct
08
Jan
09
Apr
09
Jul
09
Oct
09
Jan
10
Apr
10
Jul
10
Oct
10
Jan
11
Machinery & Spare parts Electronic Products Garments
Vietnam - I mports by Origin
($bn)
0
1
2
3
4
5
6
Jan
08
Apr
08
Jul
08
Oct
08
Jan
09
Apr
09
Jul
09
Oct
09
Jan
10
Apr
10
Jul
10
Oct
10
Jan
11
Japan Korea China ASEAN
Vietnam - Imports by Origin
(y/y 3mma)
-60
-40
-20
0
20
40
60
80
100
Jan
08
Apr
08
Jul
08
Oct
08
Jan
09
Apr
09
Jul
09
Oct
09
Jan
10
Apr
10
Jul
10
Oct
10
Jan
11
Korea China ASEAN
Sources: CEIC, ANZ Economics
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ANZ Vietnam Monthly Chartbook / 15 February 2011 / 8 of 11
PRICES: DOUBLE-DIGIT I NFLATION LOOKS SET TO STAY IN 2011
Inflation increased to its highest level since Feb 2009. CPI
inflation climbed to 12.2% (y/y) in Jan from11.8% in Dec of last
year. However, on a monthly basis, inflation eased to 1.74% from
1.98% in Dec.Inflation momentum grew 26.6% (3m/3m, saar), up from
23.4% in Dec.
Food and foodstuffs led the increase, rising 16.6% (y/y). Prices
in this category rose 2.5% (m/m),down from the 3.3% rise in Dec
2010, and contributed 6.6ppts to headline inflation. Prices
increased inmost CPI sub-indices, except for post and telecom
services. Housing and construction material pricesrose 1.3%, while
transportation prices climbed 0.8%.
On-shore gold prices fell for the first time in five months by
0.1% (m/m) in Jan. ANZ Assessment: We expect inflation pressures
will continue to mount as credit and money expanded
quickly at the end of 2010. In addition, the dongs devaluation
increases the risk of imported inflation.Our analysis shows that
double-digit inflation will prevail in H1 this year as real
interest rates remain innegative territory and credit continues to
grow rapidly.
Vietnam - Inflation
(m/m)
-8
-6
-4
-2
0
2
4
6
8
10
Jan
08
Apr
08
Jul
08
Oct
08
Jan
09
Apr
09
Jul
09
Oct
09
Jan
10
Apr
10
Jul
10
Oct
10
Jan
11
CPI
Food and Foodstuffs
Housing and Construction
Transportation
Vietnam - Inflation Momentum
(CPI 3m/3m, saar)
-40
-20
0
20
40
60
80
Jan
08
Apr
08
Jul
08
Oct
08
Jan
09
Apr
09
Jul
09
Oct
09
Jan
10
Apr
10
Jul
10
Oct
10
Jan
11
CPI Food and FoodstuffsHousin and Construction Trans
ortation
Vietnam - Foo d and Food stuffs CPI
(m/m)
-1
0
1
2
3
4
5
6
7
8
Jan
08
Apr
08
Jul
08
Oct
08
Jan
09
Apr
09
Jul
09
Oct
09
Jan
10
Apr
10
Jul
10
Oct
10
Jan
11
CPI Food and Foodstuffs
Rural
Urban
Vietnam - Inflation in Majo r Cities
(m/m)
-2
0
2
4
6
8
Jan
08
Apr
08
Jul
08
Oct
08
Jan
09
Apr
09
Jul
09
Oct
09
Jan
10
Apr
10
Jul
10
Oct
10
Jan
11
Total Hanoi HCMC
Vietnam - Housing Inflation in Major Cities
(m/m)
-6
-4
-2
0
2
4
Jan
08
Apr
08
Jul
08
Oct
08
Jan
09
Apr
09
Jul
09
Oct
09
Jan
10
Apr
10
Jul
10
Oct
10
Jan
11
Housing and Construction Materials CPI
Hanoi
HCMC
Vietnam - Inflation and Gold Inflation
(m/m)
-2
-1
0
1
2
3
4
Jan
08
Apr
08
Jul
08
Oct
08
Jan
09
Apr
09
Jul
09
Oct
09
Jan
10
Apr
10
Jul
10
Oct
10
Jan
11
-10
-5
0
5
10
15
20
CPI GPI (RHS)
Sources: CEIC, Bloomberg, ANZ Economics
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RATES AND FOREIGN EXCHANGE: FLEXIBLE MANAGEMENT OF THE DONG
GOING FORWARD Rates: Overnight deposit rates went up to 11.2% pa on
average in Jan, from 10.5% in Dec, as inflation
increased and bank liquidity tightened before the Tet holidays.
The SBV kept its policy rate unchanged,but increased its 7-day
reverse repo rate to 11.0% on 10 Jan. The rate first increased to
10.0% from9.0% (same as the policy rate) in mid-Dec last year.
Yields on government bonds in Jan were alsopushed up to the highest
levels since May 2010.
Foreign Exchange: The SBVs USD-VND rate was raised by 9.3% to
20,693 on 11 Feb. The tradingband narrowed to +/- 1.0% from 3.0%.
The market rate increased to around 20,800 after the move,from
19,500 previously. The SBV announced that it will manage the
exchange rate more flexibly in thefuture, instead of leaving the
reference rate fixed for an extended period of time.
ANZ Assessment:The dongs devaluation will support exports and
help narrow the trade deficit, atleast in the short-term. However,
it will also add to rising inflation pressures. Therefore,
domesticconfidence in the dong will unlikely to be restored with
this devaluation alone, and the currency is stillunder pressures to
depreciate further. As real interest rates have remained negative,
the urgency toraise rates decisively in order to combat inflation
has heightened.
Vietnam - Interest Rates
(% pa)
6
7
8
9
10
11
12
13
Jan
10
Feb
10
Mar
10
Apr
10
May
10
Jun
10
Aug
10
Sep
10
Oct
10
Nov
10
Dec
10
Feb
11
O/N Interbank deposit rate
SBV 7-day reverse repo rate
SBV Policy Rate
Vietnam - Real Interest Rates
(Month Avg)
-20
-15
-10
-5
0
5
10
Jan
08
Apr
08
Jul
08
Oct
08
Jan
09
Apr
09
Jul
09
Oct
09
Jan
10
Apr
10
Jul
10
Oct
10
Jan
11
SBV Policy Rate
VND Overnight Deposit Rate
VND Lending rate
Vietnam - Inflation, Policy Rate and Bond Y ield
(Month Avg)
2
7
12
17
22
27
32
Jan
08
Apr
08
Jul
08
Oct
08
Jan
09
Apr
09
Jul
09
Oct
09
Jan
10
Apr
10
Jul
10
Oct
10
Jan
11
SBV Policy Rate 1 Yr Govt Inflation (y/y)
Vietnam - Soverei gn Credit Default Swap
140
180
220
260
300
340
380
420
460
Jan10
Feb10
Mar10
Apr10
May10
Jun10
Aug10
Sep10
Oct10
Nov10
Dec10
Feb11
5 Yr CDS 10 Yr CDS 1 Yr CDS
Vietnam - Exchange Rates
18
19
20
21
22
23
24
Jan
10
Feb
10
Mar
10
Apr
10
May
10
Jun
10
Aug
10
Sep
10
Oct
10
Nov
10
Dec
10
Feb
11
Thousands
1M NDF 12M NDF USD-VND
Vietnam - Key Cross Rates
19
21
23
25
27
29
Jan
10
Feb
10
Mar
10
Apr
10
May
10
Jun
10
Aug
10
Sep
10
Oct
10
Nov
10
Dec
10
Feb
11
Thousands
165
167
169
171
173
175
177
179
EUR-VND JPY-VND AXJ-VND (RHS)
Source: Bloomberg, ANZ Economics
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