The State bank of Vietnam’s surprise move in the final days before the Tet(lunar New Year) holidays to devalue the dong by another 3.3 percent has had apositive effect in narrowing the gap between official and black market exchangerates.
On February 24, the interbank exchange rate was 18,544 VND per USdollar, while commercial banks were selling dollars at about 19,000 VND,Meanwhile, on the black market, the dollar was going for 19,350 VND, shrinkingthe difference between the bank and street exchange rates from an average ofabout 800 VND a week ago to just 350 VND.
“The central bank seems tohave achieved its goal of colling off the dollar since the latest devaluationhasn’t made the dollar increase on the street the way it has in the past,” anowner of a Ha Trung street-based foreign currency shop in Hanoi told VietnamNews.
Several banks, meanwhile, have reported that enterprises havebegun selling more dollars back to banks, easing recent dollar shortages.
“The new exchange rate and limits on US dollar deposit rates havediscouraged enterprises to hold the dollar,” said Asia Food Co director NguyenVan Tan. “Many enterprises are now willing to sell dollar to banks.”
”We sell dollars immediately when we have them,” said arepresentative of Thuan Phuoc Seafood Co, adding that the company was currentlyreceiving about 19,000 VND per dollar from commercial banks.
Sincecommercial banks continue to be restricted to an exchange rate of no more than 3percent over the interbank rate, they can now quote rates of up to 19,100 VNDper dollar, up from the pre-devaluation 17,987 VND.
“In short, thetension on the forex market has been resolved for the time being,” said PhamThanh Ha, head of Vietcombank’s treasury department. US dollar supplies were nolonger dependent just on the value of the dong but were being influenced by avariety of factors, he said, including enterprise demand.
While someimporters needing to buy dollars for overseas payments were continuing to reportdifficulties in obtaining them from banks at quoted exchange rates, AsiaCommercial Bank deputy director Nguyen Thanh Toai said, “We can just look atdifferent buy and sell prices to know that the US dollar supply is abundant.”
The central bank adjusted the value of the dong against the dollar by3.36 percent before Tet, following a depreciation of 5.44 percent back inNovember. The action was taken to improve foreign currency liquidity and controlthe trade deficit but at a high risk of igniting a new surge in inflation.
On the non-deliverable forward (NDF) market – a currency futures market– the US dollar on Feb. 24 was slightly down against Feb. 23 and was expected todecrease to 19,130 VND next month, 19,980 VND in six months, and 20,730 VND bynext February./.
On February 24, the interbank exchange rate was 18,544 VND per USdollar, while commercial banks were selling dollars at about 19,000 VND,Meanwhile, on the black market, the dollar was going for 19,350 VND, shrinkingthe difference between the bank and street exchange rates from an average ofabout 800 VND a week ago to just 350 VND.
“The central bank seems tohave achieved its goal of colling off the dollar since the latest devaluationhasn’t made the dollar increase on the street the way it has in the past,” anowner of a Ha Trung street-based foreign currency shop in Hanoi told VietnamNews.
Several banks, meanwhile, have reported that enterprises havebegun selling more dollars back to banks, easing recent dollar shortages.
“The new exchange rate and limits on US dollar deposit rates havediscouraged enterprises to hold the dollar,” said Asia Food Co director NguyenVan Tan. “Many enterprises are now willing to sell dollar to banks.”
”We sell dollars immediately when we have them,” said arepresentative of Thuan Phuoc Seafood Co, adding that the company was currentlyreceiving about 19,000 VND per dollar from commercial banks.
Sincecommercial banks continue to be restricted to an exchange rate of no more than 3percent over the interbank rate, they can now quote rates of up to 19,100 VNDper dollar, up from the pre-devaluation 17,987 VND.
“In short, thetension on the forex market has been resolved for the time being,” said PhamThanh Ha, head of Vietcombank’s treasury department. US dollar supplies were nolonger dependent just on the value of the dong but were being influenced by avariety of factors, he said, including enterprise demand.
While someimporters needing to buy dollars for overseas payments were continuing to reportdifficulties in obtaining them from banks at quoted exchange rates, AsiaCommercial Bank deputy director Nguyen Thanh Toai said, “We can just look atdifferent buy and sell prices to know that the US dollar supply is abundant.”
The central bank adjusted the value of the dong against the dollar by3.36 percent before Tet, following a depreciation of 5.44 percent back inNovember. The action was taken to improve foreign currency liquidity and controlthe trade deficit but at a high risk of igniting a new surge in inflation.
On the non-deliverable forward (NDF) market – a currency futures market– the US dollar on Feb. 24 was slightly down against Feb. 23 and was expected todecrease to 19,130 VND next month, 19,980 VND in six months, and 20,730 VND bynext February./.
