The State Bank of Vietnam plans to inject addtional US dollars into the commercial banking system to meet the growing hunger of importers for the greenback in the closing months of the year, when consumer demand for imported goods traditionally rises.
On Oct. 21 the State Bank was unable to disclose the exact date or volume of the planned dollar infusion. However, a bank source that asked to remain anonymous said that commercial banks would be required to demonstrate a real demand for dollars by enterprises.
The World Bank on Oct. 19 said that an unusually large amount of money held outside of Vietnam 's official foreign exchange reserves was continuing to pressure the value of the Vietnamese dong even as most other regional currencies strengthened.
Vietnam has devalued the dong by over 11 percent since last November in a move intended to help control the ballooning trade deficit. But other regional currencies, according to the World Bank's latest East Asia and Pacific Economic Update, were actually 10-15 percent stronger against the dollar than before the 2008 global financial crisis.
World Bank economist Deepak Mishra assumed that Vietnam had enough dollar inflows to cover current accounts, but the real issue was the amount of foreign currency held in forms not under the control of the State Bank of Vietnam , such as savings.
He estimated that this could be as high as 12 percent of gross domestic product (GDP), putting intense pressures on the exchange rate and making the dong seem overvalued.
Consistent with this position, the State Bank this week has denied any further plans to devalue the local currency.
Nevertheless, the dollar continued to become more expensive on the black market on Oct. 21, inching up another 200 VND from Oct. 19's level to an average of 20,220 VND per dollar. By the afternoon, however, this had eased back to 20,170 VND per dollar.
"Because the dollar is dancing, we don't dare hold too many dollars, in order to avoid exchange rate risks," said a forex retailer on Hanoi 's Ha Trung Street . "When customers want to buy, we will call major FX dealers to take the dollar."
On the interbank market, one dollar continued to be traded at 19,970-19,980 VND, although the official rate set by the central bank remained at 18,932 VND per dollar. Commercial banks, meanwhile, were quoting nominal sell prices of 19,500 VND.
On the non-deliverable forward (NDF) market – a currency futures market – the US dollar on Oct. 21 was expected to keep rising, hitting over 19,990 VND by next month, 20,320 VND in three months, nearly 20,790 VND in six months, and 21,560 VND by October of next year./.
On Oct. 21 the State Bank was unable to disclose the exact date or volume of the planned dollar infusion. However, a bank source that asked to remain anonymous said that commercial banks would be required to demonstrate a real demand for dollars by enterprises.
The World Bank on Oct. 19 said that an unusually large amount of money held outside of Vietnam 's official foreign exchange reserves was continuing to pressure the value of the Vietnamese dong even as most other regional currencies strengthened.
Vietnam has devalued the dong by over 11 percent since last November in a move intended to help control the ballooning trade deficit. But other regional currencies, according to the World Bank's latest East Asia and Pacific Economic Update, were actually 10-15 percent stronger against the dollar than before the 2008 global financial crisis.
World Bank economist Deepak Mishra assumed that Vietnam had enough dollar inflows to cover current accounts, but the real issue was the amount of foreign currency held in forms not under the control of the State Bank of Vietnam , such as savings.
He estimated that this could be as high as 12 percent of gross domestic product (GDP), putting intense pressures on the exchange rate and making the dong seem overvalued.
Consistent with this position, the State Bank this week has denied any further plans to devalue the local currency.
Nevertheless, the dollar continued to become more expensive on the black market on Oct. 21, inching up another 200 VND from Oct. 19's level to an average of 20,220 VND per dollar. By the afternoon, however, this had eased back to 20,170 VND per dollar.
"Because the dollar is dancing, we don't dare hold too many dollars, in order to avoid exchange rate risks," said a forex retailer on Hanoi 's Ha Trung Street . "When customers want to buy, we will call major FX dealers to take the dollar."
On the interbank market, one dollar continued to be traded at 19,970-19,980 VND, although the official rate set by the central bank remained at 18,932 VND per dollar. Commercial banks, meanwhile, were quoting nominal sell prices of 19,500 VND.
On the non-deliverable forward (NDF) market – a currency futures market – the US dollar on Oct. 21 was expected to keep rising, hitting over 19,990 VND by next month, 20,320 VND in three months, nearly 20,790 VND in six months, and 21,560 VND by October of next year./.
