Deutsche Bank refines platform for Vietnam FX hedging
Offshore entities investing in country can better manage risk exposure to restricted currency
8 Jun 2021 | The Asset

Deutsche Bank Vietnam has launched features for post–trade activity on its Autobahn FX platform that enable offshore institutions and corporates to better manage their exposures to Vietnam’s restricted currency.

The bank’s introduction of new Vietnamese dong risk-management options coincides with new Vietnam foreign exchange (FX) hedging rules introduced by the State Bank of Vietnam, which took effect on May 17 2021 to simplify onshore currency hedging for offshore entities.

The new simplified hedging rules enable foreign institutions to better manage Vietnamese dong exposures in post-trade transactions like foreign institutions investing in local currency government bonds. Foreign investors can now access the onshore forward price to hedge their underlying government bond exposure.

Foreign corporations now can also hedge for up to one year for long-term liabilities, such as intercompany loans, and roll over their hedge contracts until maturity of their liabilities. 

“Under the new regulations, foreign institutions and corporations now have more tools to hedge their exposure to local currency fluctuations,” says Deutsche Bank chief country officer Quang Huynh-Buu. “These rule changes are a positive step toward deepening foreign participation in Vietnam’s fixed-income markets, and help facilitate the growing volume of foreign investment into Vietnam.”

Deutsche Bank’s expansion of Vietnam Dong FX pricing on its platform aims to cater to the growing volume of disbursed foreign direct investment (FDI) into Vietnam, which was US$5.5 billion in April this year, up 6.8% year on year.

At end April 2021, registered FDI into Vietnam totalled US$12.25 billion, with foreign multinationals investing to develop manufacturing supply chains in the growing Vietnam economy, and foreign institutional investors seeking to participate in the country’s growth.