Bankers are yet to see the benefits of Vietnam’s emerging market, with Vietnam’s foreign exchange reserves only around $1.6bn and the nation’s central bank still struggling to find enough lending to cover its mounting debt burden.
But as it seeks to grow its economy, the central bank has been working on a policy that has not been welcomed by the financial sector.
It has been said the central government has been reluctant to make any changes to the country’s currency as it is still in a recession and has no choice but to maintain the value of the renminbi, which is pegged to the dollar.
But the bank’s deputy governor, Huynh Hetien, said that was a mistake, noting that Vietnam had been importing money at a rate of $2.6tn last year.
“We have a long way to go to develop a foreign exchange regime that is fair to all the stakeholders,” he told Reuters.
Vietnam’s currency is worth around 7% of its value, according to data from the countrys central bank.
The renminbis are worth about $4.3tn, while the dollar is worth about 25% of Vietnams gross domestic product.VAT, the official currency of Vietnam, is the only currency that the country has access to outside the country.VAN, the country s most widely used currency, is not a currency and is traded on the international markets, but is used as collateral for loans and is not backed by gold or other precious metals.
“The only thing that really matters is the renmang (the renminbei) which is the official foreign currency and there are a lot of reasons why it is not the currency of the central state,” Mr Hetian said.
“In the past we had to accept the foreign exchange of other countries, such as the dollar, but the current situation does not allow us to do that.”
The central bank wants to move Vietnam’s economy towards being able to pay its bills through its foreign exchange markets, with an eventual goal of making the renmba the only official foreign exchange.
Mr Hetie said Vietnam was still a developing economy and there were still many uncertainties about how it would transition to the new system.VET, which stands for Vietnam’s domestic currency, has been worth about 12% of the country since it was introduced in 2003.
Inflation was a major concern for some banks, especially in Vietnam, which was forced to hike its foreign reserves from $300bn in 2004 to $1tn in 2016.
The Bank of Vietnam has maintained its policy of keeping the renmillion in reserve, with some of its top officials, including its deputy governor Huynlh Hetsen, arguing that the renmint was not the only safe currency for the country at the time.
But Vietnam’s central government said the country had to increase its reserves to protect its people from the financial crisis and debt.VNTV news agency quoted Huynm Hetion as saying: “It is the bank of the government and it has to maintain stability and stability in its reserves.
We are not the first to say this.
If we don’t do that, the risks will increase and we will have a bad situation.”
Vietnamese authorities have not yet announced their intention to introduce a new currency.