Dollar rates ease as US rates steady

Illustrative image (Source: VNA)

The dollar–dong exchange rates have eased at domestic commercial banks, following a decision by the United States Federal Reserve (Fed) to keep its interest rates steady.

Vietcombank slashed both the buying and selling rates of the US dollar on September 19 by 25 VND from the previous day's close, listing them at 22,445 VND and 22,505 VND per dollar, respectively.

Vietinbank quoted its buying rate at 22,445 VND per dollar and the selling rate at 22,500 VND per dollar, both down 40 VND.

BIDV cut its buying rate by 25 VND to 22,460 VND per dollar and the selling rate by 20 VND to 22,520 VND per dollar.

At Eximbank, the buying rate was down 40 VND to 22,430 VND per dollar and the selling rate dropped by 35 VND to 22,510 VND per dollar.

Currently, the average inter-bank exchange rate is 21,890 VND per dollar. The State Bank of Vietnam (SBV) has listed the buying rate at 21,800 VND per dollar and the selling rate at 22,475 VND per dollar at its head office.

The USD-VND exchange rates increased sharply after the central bank devalued the dong by one percent, and widened the trading band for the reference rate to three percent last month, in a bid to minimise the negative impact of the sharp Chinese yuan depreciation.

Market speculations about a Fed rate hike have fuelled worries about even more pressure on the domestic currency and economy, especially when Vietnam 's current account balance is sliding into a deficit.

National Financial Supervisory Commission Vice Chairman Truong Van Phuoc said the US rates staying unchanged has allowed the market to heave "a sigh of relief," as it indicates that the Fed is continuing to maintain high caution while the US economy remains sluggish.

He said the move could not reverse market trends, however, since the US central bank would continue to aim at rate hikes later this year.

According to Phuoc, domestic macro-economic conditions have stabilised, with the economy growing at rates of six to 6.5 percent, and inflation has been controlled at low levels, with the expectation of reaching one to 1.5 percent this year.

"These factors create quite a bright outlook with positive prospects [for the domestic economy] during the rest of the year, whether the Fed raises rates or not," he said.

Banking and Finance expert Nguyen Tri Hieu argued that the latest Fed decision will only generate temporary [monetary] stability in Vietnam and that the SBV should take proactive measures to cope with future fluctuations.-VNA