SBV sells $150m to stabilize FX market in first week of Oct.

The State Bank of Vietnam (SBV) has sold $150 million in the first week of October to stabilize the dong/US dollar exchange rate, the Thoi Bao Ngan Hang (Banking Times) reported.
Previously, the central bank also sold $1.5 billion in three weeks from mid-August and $150 million during Sept. 26-29 to increase the supply of foreign currency for gold importers during the gold frenzy in August and to bring some stability to the local foreign exchange rates.

Currently, the total balance of deposits in foreign currency (mainly US dollars) in the banking system in HCM City is up to $6-7 billion, which may help stabilize the FX rate, the local newswire said.

From early October so far, the interbank average FX rate has been adjusted flexibly by the central bank. According to many economists, this move is said to be suitable to the market evolutions to avoid shocks on forex rate by the year-end.

After maintaining at 20,628 dong/US dollar for over one month, on October 5, the central bank raised the interbank average forex rate by 10 dong to 20,638 dong/US dollar and a day later (October 6), the Vietnam dong continued to be devalued by 10 dong at 20,648 dong/US dollar. Although commercial banks pushed the US dollar selling up to the ceiling of 20.854 dong and the US dollar buying price was different by only four dong, comparing to the US dollar price on the free market at 21,650 dong, the FX difference between official and unofficial markets was up to 800 dong/US dollar.

Therefore on October 7, 2011, together with five tones of gold being sold to intervene the gold market and narrow the gold price between local and global markets (gap was at only one million dong per tael), the US dollar price on free market dropped strongly by 200 dong to 21,450 dong. The central bank continued to depreciate the local greenback by 5 dong to 20,860 dong, narrowing the FX difference between two markets to 400 dong/US dollar.

On October 11, 2011, the central bank once again depreciated the local banknote by 15 dong to 20,668 dong/US dollar. On October 13, 2011, the forex rate increased by 10 dong to 20,678 dong each. Meanwhile, on the free market, on October 13, 2011, the US dollar slipped slightly to only 21,350 dong, narrowing the FX rate between the two markets to 465 dong/US dollar.

Besides, the country’s foreign currency income has been improved significantly. In the first seven months of this year, the current account balance surplus was at $1.3 billion, capital and financial balance surplus was at $9.8 billion, two fold increase against the same period last year. As of September this year, deference between expenditures and revenues of foreign currency reached $64 million. As of September 29, 2011, the balance of foreign currency deposits of credit institutions at the central bank increased 45.1% (equivalent to $586 million) compared to the end of August 2011. – Source: Vietbiz24.com

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

Posted by VBN on Oct 19 2011. Filed under Banking-Finance. You can follow any responses to this entry through the RSS 2.0. You can leave a response or trackback to this entry