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 a positive effect in narrowing the gap between official and black market exchange rates.

On February 24, the interbank exchange rate was 18,544 VND per US dollar, while commercial banks were selling dollars at about 19,000 VND, Meanwhile, on the black market, the dollar was going for 19,350 VND, shrinking the difference between the bank and street exchange rates from an average of about 800 VND a week ago to just 350 VND.

“The central bank seems to have achieved its goal of colling off the dollar since the latest devaluation hasn’t made the dollar increase on the street the way it has in the past,” an owner of a Ha Trung street-based foreign currency shop in Hanoi told Vietnam News.

Several banks, meanwhile, have reported that enterprises have begun selling more dollars back to banks, easing recent dollar shortages.

“The new exchange rate and limits on US dollar deposit rates have discouraged enterprises to hold the dollar,” said Asia Food Co director Nguyen Van Tan. “Many enterprises are now willing to sell dollar to banks.”

”We sell dollars immediately when we have them,” said a representative of Thuan Phuoc Seafood Co, adding that the company was currently receiving about 19,000 VND per dollar from commercial banks.

Since commercial banks continue to be restricted to an exchange rate of no more than 3 percent over the interbank rate, they can now quote rates of up to 19,100 VND per dollar, up from the pre-devaluation 17,987 VND.

“In short, the tension on the forex market has been resolved for the time being,” said Pham Thanh Ha, head of Vietcombank’s treasury department. US dollar supplies were no longer dependent just on the value of the dong but were being influenced by a variety of factors, he said, including enterprise demand.

While some importers needing to buy dollars for overseas payments were continuing to report difficulties in obtaining them from banks at quoted exchange rates, Asia Commercial Bank deputy director Nguyen Thanh Toai said, “We can just look at different 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 by 3.36 percent before Tet, following a depreciation of 5.44 percent back in November. The action was taken to improve foreign currency liquidity and control the 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 to decrease to 19,130 VND next month, 19,980 VND in six months, and 20,730 VND by next February./.