Vietnam central bank announced last week that it would expand the Vietnamese Dong trading range from 3% to 5%, indicating that the Vietnamese authorities are willing to tolerate the further weakening of the Vietnamese Dong, and further suggesting that Vietnam seems to have insufficient reserves to defend the Vietnamese Dong.
This also caused the Vietnamese Dong to plummet against the US dollar to plummet by nearly 1% to 24335, a record low. Since this year, as the dollar index continues to refresh its 20-year high, although Vietnam's economic data performed well and urgently exceeded expectations for the first time in two years, the Vietnamese Dong is still falling. is not only that, since October 8, , Vietnam's banking industry has experienced a bank run, and an financial crisis is sweeping Vietnam .
In this regard, FocusEconomics, a senior analysis agency in the global economy, stated in an update report released on October 16 that the core crux of the fragility of Vietnam's finance is falling into the US dollar debt trap and want to exchange interests with Wall Street Group.
Vietnam experiences a financial tsunami storm almost every decade. Although Vietnam has achieved growth in more than a decade, and is even called an Asian economic miracle, it mainly relies on accumulating risky loans and soaring foreign debt to expand economic growth, significantly exceeding the growth of GDP. has been listed by HSBC as one of the countries in Southeast Asia that most need to consolidate its finances.
data shows that as of October 15, the total debt in the Vietnamese banking system increased by 10.98% compared with the end of 2021, and credit growth will reach 15.9%, an increase of nearly 2% from three weeks ago. As of September this year, the total amount of all external debts in Vietnam was approximately US$175 billion, and the total amount of foreign debt reached 173% of the proportion of the international reserve assets of the international reserve assets, among which the proportion of Vietnam's fiscal foreign debt reached 47%, and it is still expanding.
This will become clearer in the context of the Vietnamese central bank responding to Feder 's continued aggressive interest rate hikes will have to continue hikes in response to inflation and financial storms. This shows that Vietnam's debt repayment costs and stock and bond market risks have begun to increase exponentially, and it is very likely that the United States will harvest wealth. Vietnam's economic miracle may be brought back to its original form by the United States. From now on, what is waiting for Vietnam's economy and financial markets may be surging.
We noticed that the US Treasury Department included Vietnam on the currency monitoring list as early as June this year, and in December last year, Vietnam was recognized as a currency manipulator by the United States, which means that the United States once again raised the harvesting knife against Vietnam.
As a response measure, DBS Bank 's Vietnamese interest rate experts predicted on October 15 that in the future, Vietnam's interest rate hikes will be more intense. It is estimated that Vietnam's interest rate may reach 6.8% in the first quarter of 2023. In order to defend Vietnam's financial market, the Vietnamese central bank has been actively selling the US dollar in recent months.
Data released by the Vietnamese Central Bank shows that as of September, Vietnam's foreign reserves have dropped from 109.6 billion yuan at the beginning of 2022 to US$101.4 billion. In the eight months ended in September, Vietnam even sold 20% of the position ratio of US bonds, and currently holds less than 40 billion US dollars, and is actively de-dollarization.
Considering that Vietnam can no longer cope with the continued rise in US dollar lending costs, this will intensify the volatility of the Vietnamese market and squeeze out international investment. There is a possibility of realizing the Vietnamese economic miracle and the Vietnamese market, known as the Internet celebrity stock market.
According to data from Refinitiv Eikon, as of the six months ending on October 14, international funds with a sensitive sense of smell were quietly withdrawing from Vietnamese financial markets, and foreign investors have sold up to 1260 trillion Vietnamese dong, almost 5.2 times that of the same period in 2021.
In the past four weeks, the Vietnam VN index has fallen 17.92%, and since 2022, the valuation of Vietnam's stock market has fallen to more than a decade low as investors shun stocks and seek risk-free assets.
Due to the strong selling pressure of Vietnam stock market, Vietnam's stock market has become the worst-performing stock market in the world with a drop of 8.5%, setting its largest single-week decline since May.
In fact, under the interweaving of multiple economic pressures such as corrosive high inflation, soaring energy costs and high costs of local manufacturing labor and raw materials, the United States has been harvesting Vietnam's economic and financial debt markets in recent years.
analysis believes that Vietnam is like India, and has been enjoying it and immersed in the US dollar debt trap for many years. Some people have traded with Wall Street interest groups. For example, most of the profits in Vietnam factories are in the hands of European and American manufacturers, but with the global economic development declining, some European and American companies are starting to withdraw from Vietnam and Indian markets.
Immediately afterwards, IMF warned "Vietnam pays attention to inflation and financial risks" in a report published a week ago. If it cannot solve its own dollar debt trap, the next economy may face a recession risk, and will have a negative impact on many foreign companies investing in Vietnam.
a corner of Vietnam's factory
together with Vietnam's rapidly rising corporate labor costs, land costs, and private debt burdens, combined with the country's backward infrastructure, soaring financing costs, difficulties in raw materials and commodity supply chains, and relying on low-end manufacturing to support the economy. This will inevitably affect Vietnam's already fragile fiscal revenue and international accounts balance.
Then, according to the warning of the Vietnamese Minister of Planning and Investment, although Vietnam has rich young labor dividends and tax and location advantages, the biggest economic risk facing Vietnam is that the economic system is slow to transform and the laws and regulations are incomplete. It has long implemented the invalid growth policy of , only pursuing investment quantity, not paying attention to investment efficiency and quality.
Vietnam's labor force has a young population advantage
Based on this, Vietnam seems to be more like an Indian economy that is eager to achieve success. According to the Vietnamese minister's explanation, if Vietnam's manufacturing cannot catch up with Industry 4.0 and information intelligence, then the real gap in manufacturing with other countries will become increasingly large.
Immediately afterwards, Ngo Tri Long, former director of the Price Market Research Institute of the Ministry of Finance of Vietnam, also said that if the US economy, as Vietnam's largest export market, officially fell into recession in 2023, it will intensify the recession in Vietnam, and there is a possibility that the Vietnamese economic miracle will be revealed.
This means that once there is a problem with the global economy or the macro environment of Vietnam's domestic economy, Vietnam will exponentially amplify the impact of the external environment. Based on this, according to the analysis of some research institutions, the Vietnamese economy may have a risk of recession for 21 years, which also shows that Vietnam cannot avoid being harvested by US dollar capital.
Vietnamese city one cent
At this critical moment, the Vietnamese economy may suddenly think of the Chinese market and the RMB. analysis believes that Vietnam may increasingly explore non-USD payment channels such as RMB to reduce the impact of the US dollar exchange rate on Vietnamese currency. According to the Vietnam Central Bank, at present, at least 7 provinces in Vietnam can use RMB to settle related goods or services.
It is worth mentioning that some Vietnamese media said that they hope to share China's development experience in manufacturing upgrading and innovative technology. The current Vietnamese economy is eager to learn from China everywhere. For example, 98% of Vietnam's enterprises are small and medium-sized enterprises. Vietnam needs China's funds and trade cooperation to develop its economy and manufacturing industry, and also needs Chinese enterprises to provide help in many aspects including improving infrastructure, especially in terms of financing for Vietnam's small and medium-sized enterprises. Professor Robert Ross, who has a good study of the Asian economy, analyzed that there are many places worth learning from in the Chinese market in the Chinese market, and China's economic development model is also worth learning from in countries around the world. (End)
