The State Bank of Vietnam (SBV) has issued regulations on restricting the use of foreign currencies in the country.

Under Circular 32/2013/TT-NHNN, which will take effect on February 10, in the territory of Vietnam, except for cases allowed, all transactions, payments, quotations, advertisements, pricing, prices in contracts, agreements and similar forms (including conversion or adjustment of prices of goods and services, the value of contracts and agreements) of residents and non-residents will not be allowed to be conducted using foreign currencies.

Currently, Circular 16 also specifies those cases in which foreign currency exchanges are allowed in Vietnam and in which banks, non-bank credit institutions and branches of foreign banks licensed to do business and provide foreign exchange services are allowed to perform transactions, payments, quotations, advertisements, pricing, prices in contracts, agreements in foreign exchange within the scope of business and foreign exchange services permitted by the SBV in accordance with the law.

Other cases that allow foreign exchange transactions will be considered and approved by the SBV Governor on the basis of actual situations and the necessities arising with each case.

The central bank recently confirmed that it will seek to maintain the USD/VND exchange rate to within 2 percent of current value next year. This follows the VND being depreciated by 1 percent in 2013.

The central bank weakened the dong by 1 percent against the USD in June last year, in what it said was a move to accurately reflect supply and demand on foreign currencies.

The prevalence of USD in the Vietnamese economy had decreased significantly since the end of 2011 and the exchange rates had been stabilised. The decline of dollarisation was seen in the narrowing ratio of foreign currency deposits against total money supply. The figure fell from 30 percent in 1990, to 15.8 percent by the end of 2011, most recently dropping to 12 percent by the end of August 2013, according to a SBV statement.

The central bank has also taken measures this year to stabilise exchange rates and the foreign exchange market, helping to raise the country's forex reserves, support the implementation of monetary policy and control inflation.-VNA