The US dollar appreciated against the Vietnamese dong and peaked around
21,000VND per dollar yesterday compared to the rate of 20,870 two
Typically, Techcombank sells dollars at the
highest exchange rate of VND21,015 per dollar and buys dollars at 20,910
VND per dollar.
Other commercial banks such as
Vietcombank, BIDV, Eximbank and ACB offered selling rates ranging from
20,980 to 21,000 VND per dollar on June 5, up 40 VND against the
previous day and up 120 VND from the middle of last week.
They offered buying rates ranging from 20,870 to 20,920VND per dollar.
However, the inter-banking exchange rate remains unchanged at VND20,828 since last December up to now.
Representatives of some banks attributed the situation to the fact that
the credit institutions are buying dollars to balance the over-sale of
dollars in the past and some enterprises want to buy dollars to deal
with the mature debts.
They claimed that such adjustments are normal in the operations of the banking systems.
According to a source from the website Vneconomy, the buying-selling
rates are 20,930-20,960 VND per dollar at the black or unofficial
market, up 70 VNDagainst one day ago.
In a recently
announced report, JPMorgan Chase Bank's Singapore branch said that
"before 2008 the central bank adjusted the forex rate 1 percent lower
each year. However, since 2008 on, with economic instabilities, the
adjustments on the forex rate took place more frequently. Last year, the
forex rate is operated more flexibly with the government's Resolution
No 11 to stabilise the macro economy."
promulgation of Resolution No 11, the dong has been more stable and this
year, the local currency has become one of the few regional currencies
to appreciate against the US dollar. This positive development takes
place in the context of clearly cooling inflation," JP Morgan reported.
According to the JP Morgan report, Vietnam 's inflation cycle did
not rise as previous years because the commodity prices plummeted.
Vietnam 's annual inflation as of May 2012 eased to 8.3 percent,
from 18.1 percent in December 2011. With the easing inflation, the State
Bank of Vietnam (SBV) has cut down to a total of 300 percentage points
(3 percent) for key interest rates, interest rate on open market
operations (OMO) and deposit interest rate in the past several months.
With an expectation that inflation would slip to the nadir in the third
quarter this year, with a 5 percent forecast and annual inflation
maintaining at 6-8 percent, JPMorgan predicts the central bank would
continue to reduce the interest rates by 200-300 percentage points (2-3
percent) by the end of the third quarter, this year.
Together with the negative credit growth in the first three months of
this year (starting growth again in April 2012), JPMorgan expects the
Vietnamese government will encourage commercial banks to lend more in
the last half of this year.
Earlier, in the beginning of
June 2012, Australia New Zealand Banking Group Limited (ANZ) also
forecasted the central bank would cut down the interest rate by another 2
percent and expected a reduction of 1 percent for interest rates at the
end of June or early July.
ANZ also projects the central
bank would lower the refinancing rate from 12 percent to 11 percent in
June and it would be 10 percent in September 2012. At the same time, it
would maintain this interest rate level till June 2013.
Vietnam 's balance of payments position has been improved thanks to
decreasing trade deficit as well as an increasing inward remittances and
foreign direct investment (FDI) capital inflows," JP Morgan reported.
"Conversely, the unstable balance of payments would prompt people to
sell assets in dong to buy US dollars and gold when inflation is high,"
However, with cooling prices, the opposite is
happening. The capital flows are returning to assets in dong from US
dollars and gold. JPMorgan said that Vietnam 's foreign currency
reserves would continue to increase thanks to maintaining a surplus in
balance of payments.
With the aforementioned assessments, JPMorgan forecasts that dong will remain stable against US dollar this year.-VNA