Remittances to Vietnam expand despite rise in USD price

Hanoi, August 22 (VNA) – Remittances to Vietnam have increased despite the rise in USD price against other currencies and the zero interest rate for foreign currency savings, factors experts said would impact remittance flow. In the first seven months of 2018, Ho Chi Minh City received 2.9 billion USD worth of remittances, 20 percent higher than the same period last year. Nguyen Hoang Minh, deputy director of the State Bank of Vietnam’s HCM City branch, said in the past few years remittances to the city have been increasing steadily by 10 percent each year. Since the beginning of this year, the amount has risen month-on-month, he added. The country’s macro economic and exchange rate stability means remitttances are converted into VND instead of retained in dollars. Banks pay zero interest on the greenback. Minh said in the last three years, 21 percent of remittances, which have been around 5 billion USD a year, have been invested in real estate, which is fostering property businesses and economic development. Dr Bui Quang Tin from the HCM City University of Banking said remittances could continue to increase this year though the US Federal Reserve has been increasing interest rates - which affects remittances by attracting flows back to the US - since the increases are only by 0.25 – 0.5 percent. Meanwhile, a savings interest rate of 7-8 percent in Vietnam means converting remittances into VND and depositing them is still highly profitable, he added./.