Fed hikes show limited impact on overseas remittances

December 27, 2017 | 14:44

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Over the past several years, the foreign remittance inflows sent by over fours million Vietnamese workers living from 187 countries and territories have been steady, despite the Fed’ raising interest rates three times in 2017.

Nguyen Hoang Minh, deputy director of the State Bank of Vietnam’s Ho Chi Minh City branch, said, “During the first eleven months of 2017, a collective $4.55 billion of foreign remittances (60 per cent of which came from the US and 19 per cent from Europe) was transferred to accounts in the southern city. The total overseas remittances pouring into Ho Chi Minh City in December are anticipated to reach $650 million, equivalent to that of November.”

Consequently, “Ho Chi Minh City would welcome a total $5.2 billion by the end of 2017, which would be 4.5 per cent up against 2016,” Minh added.

Remittances reaching Ho Chi Minh City are anticipated to reach $5.2 billion in 2017

Over the course of 2017, Vietnam’s foreign-exchange reserves hit an all-time high of $46 billion thanks to the latest addition of $8 billion.

Likewise, as shown in statistics provided by the World Bank, overseas inward remittances in Vietnam were roughly estimated to mount up to $13.8 billion, a 16 per cent rise in comparison to 2016, witnessing the highest growth rate over the past five years.

Previously, the Fed confirmed sticking with the plan of tightening currency for 2018 with another three increases in the base interest rate, picking up the current annual rate of 1.25-1.5 per cent.

Addressing the Fed’s expectations for 2018, various financial analysts pointed out that the minor upward trend in the dollar exchange rate is unlikely to have a significant influence on foreign remittance inflows into Vietnam.

Huynh Trung Minh, a Vietnamese financial specialist, exemplified the frequent transfers from about four million Vietnamese overseas workers in the US, France, and Australia, as well as the favourable policy framework that could accelerate overseas remittance inflows.

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