Review of economic information for the week of January 2-5

The central exchange rate increased by 66 VND, the VN-Index increased by 25.75 points compared to the previous weekend, or the State Bank of Vietnam withdrew a net 4,550.32 billion VND from the market... are some notable economic news in the week from January 2-5.

Economic news review January 3 Economic news review January 4

Economic news review

Overview

The Government believes that 2024 is a breakthrough year, of special importance in implementing the 5-year Plan 2021-2025.

At the conference summarizing the work of 2023 and deploying the work of 2024 of the Government and local authorities on January 5, 2024, the Government assessed that, in general, the socio-economic situation in 2023 in Vietnam continued to have a positive recovery trend, the economy basically achieved the general goal set out to persistently stabilize the macro-economy, control inflation, promote growth, and ensure major balances of the economy.

At the Conference, Prime Minister Pham Minh Chinh outlined the main tasks and solutions in 2024:

(i) Prioritize promoting growth, maintaining macroeconomic stability, controlling inflation, ensuring major balances of the economy; continue to operate monetary policy proactively, flexibly, promptly and effectively; coordinate synchronously, harmoniously and closely with a reasonable, focused and key expansionary fiscal policy and other policies; promote traditional growth drivers such as investment, export, consumption, while promoting emerging growth drivers such as regional connectivity, innovation, digital transformation, green transformation, etc.; consolidate traditional markets while expanding new markets; accelerate the disbursement of public investment capital and National Target Programs; increase revenue and save state budget expenditures; strictly control budget deficit, public debt, government debt, and national foreign debt; determine to save 5% of expenditures and increase state budget revenue by at least 5% in 2024.

(ii) Promote the drastic, synchronous, substantive and effective implementation of strategic breakthroughs; continue to cut and simplify administrative procedures and business regulations, striving to cut at least 10% of administrative procedure compliance costs by 2024; accelerate the construction progress of key transport works, especially Long Thanh International Airport, submit to competent authorities for approval of the investment policy for the North-South high-speed railway project; effectively implement the Plan to implement the VIII Power Master Plan; promote the development of high-quality human resources associated with science and technology, promote startups and innovation; focus on training high-quality human resources for emerging industries and fields.

(iii) Focus on effectively and substantially restructuring the economy in association with growth model innovation, development of digital economy, green economy, circular economy, emerging industries and fields; focus on recovering and strongly developing industries, especially processing, manufacturing, and semiconductor chip production; promote restructuring of the agricultural sector in association with new rural construction; implement the Program of 1 million hectares of clean rice land with low carbon emissions; strive to have 80% of communes meeting new rural standards by the end of 2024.

(iv) Review and improve institutions, mechanisms, policies, and regional linkage organizations and promote regional economic development; promote the role of regional coordination councils; effectively implement the Politburo's Resolutions on the six socio-economic regions.

(v) Resolutely and effectively implement the Project to invest in the construction of at least 1,000,000 social housing apartments; strive to complete at least 130,000 apartments by 2024...

The Prime Minister emphasized that the tasks set for 2024 are very heavy, so he requested ministries, branches and localities, from the beginning of the year, to focus on promoting disbursement of public investment capital, 3 National Target Programs; resolutely remove difficulties for production and business...

Domestic news

In the foreign exchange market during the week of January 2-5, the central exchange rate was adjusted down sharply by the State Bank of Vietnam in the first 2 sessions of the week and then increased sharply in the last 3 sessions. At the end of January 5, the central exchange rate was listed at 23,932 VND/USD, a sharp increase of 66 VND compared to the previous weekend session.

The State Bank of Vietnam's transaction office continued to list the USD buying price at 23,400 VND/USD, while the USD selling price at the end of the week was listed at 25,078 VND/USD, 50 VND lower than the ceiling exchange rate.

The interbank USD-VND exchange rate fluctuated in an upward trend last week. At the end of the session on January 5, the interbank exchange rate closed at 25,370 VND/USD, a sharp increase of 120 VND compared to the session at the end of the previous week.

The dollar-VND exchange rate on the free market only increased and decreased slightly last week. At the end of the session on January 5, the free exchange rate decreased by 20 VND in the buying direction while increasing by 30 VND in the selling direction compared to the previous weekend session, trading at 24,700 VND/USD and 24,800 VND/USD.

Interbank money market from January 2-5, interbank VND interest rates increased sharply in the first session of the week and then decreased sharply in the following sessions. Closing on January 5, interbank VND interest rates were traded around: overnight 0.20% (-3.40 percentage points); 1 week 0.40% (-2.88 percentage points); 2 weeks 0.70% (-2.24 percentage points); 1 month 1.75% (-0.81 percentage points).

Interbank USD interest rates fluctuated slightly up and down across all terms. At the end of the week, January 5, the interbank USD interest rate closed at: overnight 5.08% (unchanged); 1 week 5.21% (+0.04 percentage points); 2 weeks 5.30% (+0.03 percentage points) and 1 month 5.39% (+0.02 percentage points).

In the open market from January 2-5, in the mortgage channel, the State Bank bid for a 7-day term, with a volume of VND 4,000 billion, the interest rate was all at 4.0%. There were VND 1.04 billion won bids, VND 4,551.36 billion matured. Thus, the State Bank withdrew a net VND 4,550.32 billion from the market last week, with VND 1.04 billion circulating on this channel.

The State Bank of Vietnam continued not to offer State Bank bills for auction last week. There are no more bills circulating on the market.

On the bond market on January 3, the State Treasury called for bids of VND5,000 billion in government bonds. Of which, the 5-year and 30Y terms called for bids of VND500 billion each, the 10-year and 15-year terms called for bids of VND2,000 billion each. However, there was no winning bid volume for all terms.

This week, on January 10, the State Treasury offered VND5,000 billion in government bonds, of which 5-year and 30-year terms offered VND500 billion each, and 10-year and 15-year terms offered VND2,000 billion each.

The average value of Outright and Repos transactions in the secondary market last week reached VND7,619 billion/session, a sharp decrease compared to VND17,770 billion/session of the previous week. Government bond yields last week tended to increase and decrease alternately across maturities. At the close of the session on January 5, government bond yields traded around 1-year 1.54% (-0.005 percentage points); 2-year 1.54% (-0.01 percentage points); 3-year 1.55% (-0.02 percentage points); 5-year 1.55% (+0.02 percentage points); 7-year 1.87% (-0.08 percentage points); 10-year 2.25% (+0.01 percentage points); 15-year 2.44% (+0.003 percentage points); 30 years 2.99% (-0.02 percentage points).

Stock market week from January 2-5, the stock market increased for the third consecutive week. Closing session on January 5, VN-Index stood at 1,154.68 points, up 25.75 points (+2.28%) compared to the previous weekend; HNX-Index added 1.41 points (+0.61%) to 232.76 points; UPCoM-Index increased 0.96 points (+1.10%) to 87.93 points.

Market liquidity increased slightly to VND19,700 billion/session from VND17,200 billion the previous week. Foreign investors continued to net sell nearly VND1,400 billion on all three exchanges.

International News

The US Federal Reserve (Fed) released the minutes of its December meeting, and the US also received a lot of important economic information. Regarding the Fed, in the minutes of the meeting released on January 4, the agency said that the US economy slowed down in the fourth quarter compared to the rapid growth in the third quarter. The growth rate in 2023 is generally quite stable, but will slow down below potential in the coming years, due to the full impact of tight monetary policy, as well as more difficult financial and credit conditions.

In terms of inflation, the core personal consumption expenditure (PCE) price index is forecast to be close to 2.0% in 2026, despite many geopolitical and supply chain risks. Accordingly, members agreed to maintain the policy interest rate at 5.25-5.5% at this meeting, and will continue to assess the cumulative effect of monetary policy and its lag effects on the economy as well as inflation to make appropriate decisions in the future.

Regarding the US economy, the Institute for Supply Management (ISM) said that the manufacturing PMI in the country was at 47.4% in December, up from 46.7% in November and slightly above expectations of 47.2%. In contrast, the service sector PMI was only at 50.6%, down from 52.7% in November and also lower than the forecast of 52.5%.

Next, in the labor market, the United States created 8.79 million job openings in November, slightly lower than the 8.85 million in October and the 8.84 million forecast. In December, the country created 216 thousand new non-farm jobs, higher than the 173 thousand in November and at the same time higher than the forecast of 168 thousand. The unemployment rate was 3.7% last month, equal to the statistical results in November and contrary to the forecast of an increase to 3.8%. Finally, the average income of US workers increased by 0.4% compared to the previous month in December, equal to the increase in November and slightly exceeding the expected increase of 0.3%.

The Eurozone recorded a number of notable indicators. First, the official Eurozone manufacturing and services PMIs came in at 44.4 and 48.8 in December, both revised up from 44.2 and 48.1 in the preliminary survey.

Inflation-wise, the Eurozone core CPI rose 3.4% year-on-year in December, down from 3.6% in November and in line with forecasts. Meanwhile, headline CPI rose 2.9% year-on-year last month, up from 2.4% in November but still below forecasts of 3.0%.

In Germany alone, the headline CPI rose 0.1% month-on-month in December after falling 0.4% in the previous month, roughly in line with forecasts for a 0.2% increase. Compared to the same period in 2022, the German CPI rose 3.7%.

Finally, German retail sales fell a sharp 2.5% month-on-month in November after rising 1.3% in the previous month, deeper than the forecast 0.5% decline. Compared to the same period in 2022, German retail sales fell 3.1%.

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