Banking experts attributed the slowdown to changes in the US market under the impact of the US presidential election in November, but they expected the flow to increase around the Lunar New Year Festival, which falls in late January 2017.
According to Deputy Director of the State Bank of Vietnam’s Ho Chi Minh City branch Nguyen Hoang Minh, remittances from the US account for about 60% of the total amount. Therefore, any changes in the market will remarkably affect the flow of remittances into Vietnam.
Minh pointed to several reasons for the falling remittances from the US market, saying that the possibility that the US Federal Reserve would raise its interest rate late this year prompted many to keep their USD instead of sending the money to Vietnam, where the interest rate for deposits in USD is 0%.
Besides, the lack of any clear improvement related to the Trans-Pacific Partnership (TPP) also means a reduction in investment in Vietnam, Minh added.
The drop in overseas remittances will affect the supply of capital for production and business activities, but not much, since the State Bank has put in place several exchange rate control policies. At the same time, there are other sources of foreign currencies on the market, such as exports and tourism.
Discussing recent fluctuations in the current USD/VND exchange rate, Le Anh Tuan, Deputy Director General of the UK-based Dragon Capital Group said the changes of 1-2% were small, adding that the psychological factor seemed to be the force driving the change.
Nguyen Hong Hue, Vice Chairman of the Association of Overseas Vietnamese Entrepreneurs, underlined the potential for overseas Vietnamese investing in their fatherland, particularly in the hi-tech, banking and service sectors.
As of the end of November, remittances to HCMC totalled US$4.36 billion. The figure is expected to increase, with around 120,000-130,000 overseas Vietnamese to returning to Vietnam for the traditional Tet (Lunar New Year) holiday.
