Don't worry about interest rate reduction being 'blocked'

Reduce interest rates, depending on domestic policies

Financial expert Nguyen Tri Hieu said that the Fed's interest rate hike will have a negative impact on the global financial market, including Vietnam. First of all, the exchange rate will be under pressure to increase if Vietnam does not have enough foreign exchange reserves to stabilize supply and demand in the market. Or even the stock market may be affected if foreign investors withdraw their capital. This will make the State Bank's policy of reducing interest rates or loosening monetary policy more difficult. However, if domestic demand for foreign currency does not increase, the State Bank will have enough power to stabilize the market. Similarly, on the stock market, when foreign investors sell heavily but domestic investors increase their purchases, the market will stabilize. This will help the State Bank continue to implement the policy of reducing interest rates.

Gold is less attractive, interest rates in VND are likely to decrease

Dr. Le Dat Chi, Deputy Head of the Finance Department (Ho Chi Minh City University of Economics ), commented that in theory, the Fed's interest rate hike is also disadvantageous and puts pressure on Vietnam's exchange rate. Because the forward rate formula is related to the interest rate difference between the Fed and the VND interest rate. However, this is only a small part because the State Bank has many policies and tools to manage foreign exchange. The signal sent by the Fed shows that this is the last interest rate hike, so the pressure is not great.

On the other hand, the Fed's interest rate hike shows that this agency continues to persistently pursue the goal of fighting inflation and maintains the financial market's belief that in the coming time, US inflation will go down, people's lives will be less difficult. Vietnam and many other countries will no longer worry about the problem of importing inflation from outside. Especially, in the current context when Vietnam's trade balance has a trade surplus for 4 months, foreign exchange reserves have increased again, domestic inflation is under control... the impact of the Fed's policy is not too great and does not cause as many difficulties as before.

"The reduction in interest rates in the market from now until the end of the year mainly depends on domestic monetary and financial policies. When the exchange rate remains stable, there is no reason for interest rates in Vietnam to remain high," Dr. Le Dat Chi affirmed.

If USD interest rates in the US market stagnate and do not increase in the near future, it will not put pressure on VND deposit interest rates of banks. Currently, banks are reducing deposit interest rates to create conditions for reducing lending interest rates. Large banks such as Vietcombank, Agribank , MB... have just made a move to reduce lending interest rates by 0.5 - 1%/year.

World gold price hits peak, domestic gold at risk

After the Fed raised interest rates by 0.25 percentage points and sent a message that it would temporarily stop raising interest rates in the near future, gold prices skyrocketed to $2,076/ounce - the highest in the history of precious metals. On the afternoon of May 4, the price of gold on the international market dropped to $2,035/ounce due to profit-taking selling pressure. However, the precious metal also recorded an increase of $20-50/ounce in 24 hours, equivalent to an increase of VND570,000-1.4 million/tael. However, the domestic price of SJC gold bars on May 4 only increased by VND50,000 per tael. Saigon Jewelry Company - SJC bought SJC gold bars for VND66.6 million and sold for VND67.2 million. Phu Nhuan Jewelry Joint Stock Company (PNJ) bought SJC gold bars for 66.65 million VND and sold for 67.25 million VND...

Only the 4-9 gold ring increased in price at a fairly strong rate, about 500,000 VND/tael. SJC Company bought at 56.15 million VND, sold at 57.2 - 57.3 million VND. PNJ sold gold rings at 57.4 million VND, bought at 56.3 million VND... This is the highest price in many years for gold rings. The increase in domestic gold prices did not keep up with the world, leading to the price of SJC gold bars being only 9.3 million VND/tael higher than the international price, while gold rings increased at a lower rate, up to 600,000 VND/tael.

Expert Phan Dung Khanh said that although the Fed's interest rate hike was within the market's forecast, the decisive timing coincided with the bankruptcy of several US banks, causing more cash flow in the market to seek refuge in gold, pushing prices to skyrocket. In the past 4 years, the gold price has reached 2,070 USD/ounce 3 times but then turned down. If the weekly and monthly closing price of the gold market is above this level, it will truly break out to a higher level. Otherwise, the price of 2,070 USD/ounce will become the resistance level of the precious metal in the near future.

"When the Fed pauses its interest rate hikes in the coming time, the factors supporting the USD-Index to increase will decrease significantly. In case this index drops to 99 - 100 points, gold prices will increase sharply," Mr. Khanh commented and advised domestic investors not to invest in precious metals. In fact, observing the domestic market on May 4, the price of SJC gold bars is not very attractive when it only increased by 50,000 VND/tael but is still more expensive than world gold by nearly 10 million VND/tael. Therefore, holding SJC gold bars has not been profitable for many years.

"The world price has exceeded the record level, but the price of SJC gold bars is 7 million VND/tael lower than the peak. Therefore, even if the world gold price increases rapidly, it is still unknown whether SJC gold can break through or not," said Mr. Khanh.

Mr. Nguyen Ngoc Trong, Director of New Partner Gold Company, said that in principle, when the USD interest rate stagnates, the gold price will increase. The domestic gold price will also be affected by the fluctuation of the world price. However, the current domestic market situation is having the opposite developments compared to before. In the context of economic difficulties, those who are holding gold will tend to wait for the time when the price is high to sell, to get VND to cover business or living expenses. Moreover, the amount of money in the population is no longer as abundant as before, but is mainly in real estate.

In addition, the profit margin of gold is not high at present. Investors who spend 67 million VND to buy a tael of gold will immediately lose 600,000 - 700,000 VND/tael, then wait for the price to increase to make a profit. Therefore, buying gold at this time is mainly to find a safe place, not a good profit channel like before. According to Mr. Trong, the USD interest rate on the international market remaining instead of increasing will help stabilize the domestic exchange rate. This will help gold not be affected much by the exchange rate factor.

Stocks rise and fall alternately

Yesterday, May 4, the VN-Index closed the trading session, down 8.51 points, or 0.81%, to 1,040.61 points. In contrast, the HNX-Index increased 0.68 points, or 0.33%, to 208.15 points. The transaction value on the two listed floors reached nearly VND11,800 billion, a slight increase compared to the end of last week. However, foreign investors still net sold more than VND300 billion on the Ho Chi Minh City Stock Exchange.

Source link: https://thanhnien.vn/khong-lo-da-giam-lai-vay-bi-chan-185230505013257692.htm