Businesses again have to pay additional fee for dollars

Commercial banks have begun restricting the lending in dollars by raising the lending interest rates. The actual dollar price applied in the transactions at banks is higher by 100 dong per dollar than the quoted level.

The State Bank of Vietnam on September 19, announced the interbank exchange rate at 20,628 dong per dollar, the same rate which has been preserved in the last 22 consecutive days. Commercial banks also keep the quoted dollar prices unchanged at 20,834 dong per dollar.

Vietcombank, the biggest dollar trader in Vietnam, for example, quoted the purchase price at 20,830 dong per dollar on September 29, and the sale price at 20,834 dong per dollar, which is equal to the ceiling level.

The gap between the sale and the purchase prices applied by commercial banks is hovering around 4-30 dong per dollar.

The unchanged official exchange rate and commercial banks’ rate both have made people believe that the foreign currency market keeps stable. In fact, no big changes can be seen on the market in recent days, after the State Bank successfully kept the market stable and stopped the dollar price increase wave.

However, in fact, the actual dollar prices are higher than the quoted prices.

Do Duy Thai, General Director of Viet Steel Corporation, said that his company has to buy US dollars at the prices which are tens of dong per dollar higher than the prices quoted by commercial banks over the last few days. The steel company needs dollars to pay the debt worth 30 million dollars.

Thai said that the bank which he contacts just can satisfy a part of his demand for dollars. The bank helps him buy dollars from other sources, but he has to accept higher prices for the dollars.

Every time, when banks charge the sale prices higher than the quoted prices, businesses understand that the dollar supply tends to become short and that they should buy dollars as soon as possible, since the dollar price may increase further.

Deputy General Director of a joint stock bank has confirmed that right after seeing little signs of the dollar price increases, businesses have been rushing to buy dollars to pay debts. Therefore, over the last few days, banks have to sell dollars at the prices higher by 100 dong per dollar than the quoted prices.

Meanwhile, Diep Thanh Kiet, Director of WEC Saigon, a garment and embroidery company said that he still sells dollars to banks at the quoted prices of 20,830 dong per dollar. Diep said that he knows the dong/dollar exchange rate has been fluctuating for the last two weeks, but banks do not raise the purchase prices, and sellers – the export companies which have earnings in dollars – dare not demand higher prices.

Analysts say it is clear that banks do not have dollars in big quantities in their hands now. Meanwhile, they believe that the demand for dollars would increase towards the end of the year, when loans become due and businesses all rush to buy dollars to pay bank debts.

In fact, banks now try to narrow the foreign currency credit, which has led to the significant decreases of dollar outstanding loans. Explaining this, Do Minh Toan, Deputy General Director of ACB, said that if there would be big changes to the dollar prices in the time to come, businesses – the borrowers in dollars – will find it difficult to buy dollars to pay bank debts. If so, both banks and businesses would incur the high risks.

The lending interest rates of dollars loans have increased from 6-7 percent to 8-9 percent per annum. Meanwhile, the ceiling interest rates for dollar deposits are now capped at 2 percent, which has made it difficult for banks to attract US dollar deposits. Meanwhile, banks have to have higher compulsory reserve ratio, which makes the dollar capital costs increase.

Tags: Vietnam banking industry, Vietnam finance, Vietnam financial