Black market for US dollar on the wane

The US dollar exchange rate in banks has risen higher than in the free market, prompting people and enterprises to trade with banks rather than the black market.

Since the Government crackdown on the dollar black market in March, its exchange rate has dropped sharply and many illegal dollar-trading centers have ceased their transactions in the US dollar currency.

Ban Co Market in District 3 and Pham Van Hai Market in Tan Binh District in Ho Chi Minh City were once considered hotspots for US dollar trading. Presently these areas are dull and have seen very few transactions being conducted.

Previously, more than 10 shops traded in the US dollar around Ban Co Market, which were usually crowded with people, but since early March, only one shop seemed to be operating.

However, this shop has conducted illegal transactions only with its regular customers and completely refused to deal with strangers.

The free market is not the only one refusing to deal in the dollar but also stores, supermarkets and small businesses are refusing payments in US dollars.

When a customer made a payment in US dollars at the Citimart supermarket in Binh Chanh District, the sales-girl refused and asked for Vietnam dong instead.

People used to sell dollars in the free market because the exchange rate was always higher than in banks. However, the situation has now reversed.

On the afternoon of May 5, the buying and selling price of the dollar was VND20,500 and VND20,570 per dollar respectively in the black market, while the exchange rate regulated by the State Bank of Vietnam was VND20,708 per dollar.

The dollar rate increase has encouraged people to sell their dollars to banks, helping banks increase their dollar reserves.

Local exporters have also been encouraged to sell their dollars to banks rather than in the black market.

The director of a foreign exchange company of a commercial bank said exporters used to set buying prices for banks when they sold dollars to banks but now this is done by banks. Banks no longer follow the free market exchange rate but decide the rates.

People have rushed to sell dollars because the saving interest rate in dollars has reduced to one percent and three per cent for organizations and individuals respectively.

Meanwhile, deposit interest rates in Vietnam dong are now much higher than in US dollar. Therefore, people prefer making deposits in Vietnam dong – SGGP

Tags: Vietnam banking industry, Vietnam finance, Vietnam financial, Vietnam forex market