Big guns sell $450 million to banks

Commercial banks have purchased $450 million from state owned conglomerates and general corporations since the beginning of January 2010.

The move follows a Government request for dollars to be sold to help stabilize the foreign currency market.

The information was released by the deputy governor of the State Bank of Vietnam Nguyen Dong Tien on February 1, 2010 at the Government’s regular press conference in Hanoi.

Tien said that the foreign currency position of commercial banks has been considerably improved thanks to the volume of foreign currencies successfully purchased by banks. The volume includes the $450 million banks have purchased from state owned economic groups and general corporations

According to the State Bank of Vietnam, by the end of November 2009, the deposit balance of seven state owned economic groups and general corporations at banks had reached $1.9 billion, including $700 million worth of demand deposits and 1.2 billion dollar worth of fixed term deposits.

The central bank said that the majority of the dollar sold to banks recently are demand deposit. The end of February will be the deadline for the enterprises to fulfill their tasks of selling foreign currencies to banks.

Commercial banks are still quoting the dong/dollar exchange rate at the ceiling level, hovering around 18,459-18,479 dong per dollar, while the interbank exchange rate announced by the State Bank of Vietnam for February 1, 2010 was 17,941 dong per dollar. On the black market, the dong/dollar rate is hovering around 19,300 dong per dollar.

The gap between the official exchange rate and the black market’s rate remains high which has been at 1,000 dong per dollar since the State Bank applied drastic measures to stabilize the foreign currency market. The market is considered stabilized if the gap is smaller than one percent

The dong/dollar exchange rate on the free market slightly increased last week after a long week of standing still which has been partially blamed on the gold price fluctuation. The domestic gold price is now one million dong per tael more expensive than the world price, if calculating gold price with the free market’s exchange rate. There has been no sign showing that the State Bank may allow to import more gold after it granted quota on gold import late last year.

The latest report by the State Bank of Vietnam showed that the trading volume on the interbank market in the week from January 22 to January 28 was 86,660 billion dong and 1,573 million dollar, increasing by 7,973 billion dong and 59 million dollar over the previous week.

The average VND interest rate in the interbank market last week increased by 0.6-2 percent per annum in all terms of loans. Meanwhile, the dollar interest rate tends to decrease with the rate down by 0.1-1.43 percent last week in comparison with the previous week.

VietNamNet/VNE

Tags: Vietnam finance news, Vietnam foreign currency market