Experts suggested firms use more derivative instruments, such as futures and forward contracts, to minimise exchange rate risks when they can no longer borrow the US dollar from commercial banks, starting early this month.
The restriction on foreign currency lending actually reduces the "virtual" supply and demand of foreign currencies, contributing to reducing dollarisation in the economy
Commercial banks will no longer allow the provision of mid- and long-term foreign currency loans for offshore payments of imported goods and services from September 30 this year.
Governor of the State Bank of Vietnam (SBV) Le Minh Hung has recently directed the entire banking industry to strictly control foreign currency lending to better minimise dollar speculation and fight against dollarisation in the economy.
Exporters will no longer be allowed to borrow bank loans in foreign currencies beginning next year, if the State Bank of Vietnam (SBV) does not extend a circular regulating the loans.
The Government Office last week sent a written document to the central bank governor, referring to the mobilisation of idle gold and foreign currency sources from the people.
The State Bank of Vietnam’s anti-dollarisation efforts have managed to keep the dong-dollar exchange rate fairly steady for a long time, thus helping stabilise the monetary market.
Export enterprises and commercial banks welcomed the State Bank of Vietnam (SBV)’s decision to allow credit institutions to resume provision of foreign currency loans two months after it was banned.
Domestic firms have taken the first measures in an effort to adapt to the State Bank of Vietnam (SBV)’s new regulation on tightening foreign currency credit.
Vietnamese deposits overseas, which were previously negligible, skyrocketed to hit 7.3 billion USD as of the third quarter of 2015, it was reported at a conference in Hanoi on April 12.
The State Bank of Vietnam (SBV) will tighten lending in foreign currencies in some cases from March 31 in an effort to step up its anti-dollarisation drive.
The maximum interest rate paid to individuals depositing USD in local banks will be zero percent per year from December 18, the central bank announced.
The State Bank of Vietnam (SBV)’s surprising decision to cut the interest rates on USD deposits on September 27 was welcomed by economic experts, who said the move was a step towards many goals.
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