It was forecast by Nguyen Hoang Minh, deputy director of the State Bank of Vietnam's Ho Chi Minh City branch.
The amount is slightly down from Minh’s own prediction a month ago. Previously, last month Minh said that remittance to the city could reach $5.7 billion this year.
Experts attributed the projected decrease of the city’s overseas remittances by the end of the year mainly to pressure from the Federal Reserve System's (Fed) policy.
Overseas remittance to Ho Chi Minh City is revised down to US$5.2 billion in 2017.
According to the Saigon Securities Incorporation (SSI), Janet Yellen, chairman of the Fed, in September said that the Fed may hike interest rate three times in 2018. It is forecasted that the VND/USD exchange rate in the next four or five months will be on the upward trend, but the growth will be gradual and controlled by SBV. This will affect the supply of remittances from the US, which accounts for the majority of total overseas remittances into Vietnam.
Overseas remittances into Vietnam have been constantly increasing since 2010 and reached a record high of $13.2 billion in 2015, then decreased by 33 per cent in 2016.
However, not only Vietnam, but many other developing countries in the world see the decrease in overseas remittances. According to the latest report of the Word Bank, India was the country with the highest overseas remittance inflows in 2015, but these inflows were reduced by 5 per cent in 2016. Similarly, Bangladesh, Pakistan, and Sri Lanka also reported a decline in overseas remittances of 3.5, 5.1, and 1.6 per cent, respectively.
Recently, the majority of overseas remittance has derived from the country's labor export. Thus, to raise overseas remittances, it is necessary to ensure high labor quality and expand the labor export market.
According to Minh, remittance inflows to Ho Chi Minh City totaled $3.9 billion in the first ten months of this year, up $600 million from the January-September period.
The United States, Australia and Canada remain the largest sources of remittances to the city. Money sent by Vietnamese workers in China, Japan, South Korea and Southeast Asian countries have increased, but insignificantly, Minh said.
Strong remittances have helped buoyed the USD/VND rate, which hovers around VND22,670-22,760 for bids and asks at major commercial banks, still below the ceiling imposed by the central bank.
Given the stable exchange rate, as much as 72 percent of the money sent from abroad has been poured into production and business, 22 percent into real estate and 6 percent spent on personal items, according to the State Bank of Vietnam's Ho Chi Minh City branch.
Ho Chi Minh City, which is the country’s largest economic hub, normally accounts for around a half of remittances to Vietnam annually.