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SBV raises interbank loan rate

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The State Bank of Vietnam on Oct. 26 raised the interbank exchange rate by 20 VND to 20,768 VND per dollar, its highest level this year.

It was the 12th increase since October 5.

The interbank dollar exchange rate has advanced 140 VND per dollar, or 0.68 percent, over the past two months since the central bank committed to keeping fluctuation under 1 percent until the end of this year. Therefore, to meet its pledge, the dollar exchange rate will be allowed to surge 0.32 percent or by 66 VND.

At commercial banks, dollar exchange rates on Oct. 26 listed higher than 20,970 VND, up 21 VND over the previous day. Vietcombank and Vietinbank quoted the greenback at 20,971/20,976 VND while Eximbank and ACB figures were 20,953/20,963 VND.

Experts said that the foreign exchange market will likely experience tension at the end of the year when demand for US dollars increased due to rising imports and repayment of foreign currency loans.

However, vice chairman of the National Financial Supervisory Commission, Le Xuan Nghia told Tuoi Tre (Youth) newspaper that the Government will indeed be able to keep rate fluctuation under 1 percent.

Nghia explained that balance of payments is expected to see a surplus of 4-5 billion USD this year, the first since 2007. The country's foreign exchange reserves are also estimated to be equal to 7.5 weeks of import cover compared to 3.5 weeks earlier this year, higher than that expected by the National Financial Supervisory Commission.

He said that capital accounts currently enjoy a surplus of around 9 billion USD, alongside positive remittance.

While the Government fights inflation, it cannot let the exchange rate rise as sharply as during previous years, he noted.

Nghia explained that one of the factors which have pressurised exchange rates during recent days include foreign currency deposits being 7 billion USD lower than the amounts loaned out as of the end of September.

Local corporate borrowers are trying to buy dollars to repay their foreign currency loans while the central bank is willing to sell dollars to meet high demand, he said, adding that the bank will use the balance of payments surplus to stabilise the forex market./.
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