The State Bank of Vietnam plans to increase the value of the Vietnamese dong against the US dollar over the next four months in a bid to protect the value of the domestic currency, State Bank Governor Nguyen Van Binh told Sai Gon Economic Times this week.
"Since February, the real value of Vietnamese dong has risen slightly," Binh said.
"If necessary, the central bank will consider further adjustment of the exchange rate," he added. "The primary target of foreign exchange policy is to stabilise the dong and keep it under control, not to fix it. Confidence in the domestic currency has been fading and we must immediately restore that confidence, which is vital to economic stability."
Binh advised the public that holding onto the dong was the best policy to keep people from flocking to invest in gold and to reduce dollarisation of the economy.
Strategies to protect the dong would include deposit interest rate reform that created predictable interest rates at levels of around 14 percent for dong deposits and 2 percent for US dollar deposits, he said.
Recent dollar speculation on the foreign exchange black market was a move to take advantage of soaring global gold prices, he added.
"In fact, the demand for dollars to pay for imports is not high, and even petrol importers are not demonstrating a high demand for dollars," Binh said. "The nation's foreign reserves are sufficient to offset any imbalance in the supply of and demand for dollars."
The central bank bought up over 4 billion USD in the first seven months of the year. At the Consulative Group Meeting in June, the International Monetary Fund estimated that Vietnam 's foreign reserves totalled 13.5 billion USD, equivalent to 1.5 months of imports. On Aug. 14, banks quoted buy/sell rates of 20,814 VND/20,824 VND per dollar, while the greenback traded for under 21,000 VND on the black market.
On August 9, as domestic gold prices soared to an all-time record of 46 million VND (2,203 USD) per tael, the dollar was traded at 21,300 VND on the black market and around 20,810 VND at banks./.
"Since February, the real value of Vietnamese dong has risen slightly," Binh said.
"If necessary, the central bank will consider further adjustment of the exchange rate," he added. "The primary target of foreign exchange policy is to stabilise the dong and keep it under control, not to fix it. Confidence in the domestic currency has been fading and we must immediately restore that confidence, which is vital to economic stability."
Binh advised the public that holding onto the dong was the best policy to keep people from flocking to invest in gold and to reduce dollarisation of the economy.
Strategies to protect the dong would include deposit interest rate reform that created predictable interest rates at levels of around 14 percent for dong deposits and 2 percent for US dollar deposits, he said.
Recent dollar speculation on the foreign exchange black market was a move to take advantage of soaring global gold prices, he added.
"In fact, the demand for dollars to pay for imports is not high, and even petrol importers are not demonstrating a high demand for dollars," Binh said. "The nation's foreign reserves are sufficient to offset any imbalance in the supply of and demand for dollars."
The central bank bought up over 4 billion USD in the first seven months of the year. At the Consulative Group Meeting in June, the International Monetary Fund estimated that Vietnam 's foreign reserves totalled 13.5 billion USD, equivalent to 1.5 months of imports. On Aug. 14, banks quoted buy/sell rates of 20,814 VND/20,824 VND per dollar, while the greenback traded for under 21,000 VND on the black market.
On August 9, as domestic gold prices soared to an all-time record of 46 million VND (2,203 USD) per tael, the dollar was traded at 21,300 VND on the black market and around 20,810 VND at banks./.
