US dollar supply on the rise: SBV

Commercial banks have sold out US dollars in the short-term to gain dong on the inter-bank market, which has helped the dollar price ease significantly, Thanh Nien newspaper reported on April 18.

On April 18, the State Bank of Vietnam (SBV) announced the interbank average exchange rate at 20,728 dong per dollar.

Commercial banks listed the ceiling price of one US dollar for 20,935 dong and the ask dollar price at 20,925 dong per dollar. Free market activities were very limited as one dollar could hover at approximately 20,940 dong.

After nearly a week of applying the ceiling dollar interest rate of 3 percent per year for individual customers as prescribed by the central bank, Phan Huy Khang – CEO of Southern Commercial Joint Stock Bank (Southern Bank), said:

“For some days, people have been selling dollars to banks for dong savings. Therefore, source of US dollars at banks is not too stressed as before. ”

According to Nguyen Hoang Minh – vice director of SBV – HCM City Branch, the central bank only applied its strict rule on the US dollar interest rates at 3 percent/year for funds mobilised from individuals, while companies, corporations are still selling US dollars to banks, which has created positive changes for the forex market. Last week, some banks reported to the central bank that they bought successfully US dollars from residents. US dollar prices inside and outside the banking system are equal, creating conditions for banks to purchase the foreign currency from the people. Some banks said they had bought dollars for sale to individuals travelling abroad.

Minh said: “For individual customers, the trend of shifting from dollars into dong savings to enjoy the higher interest rates will occur more in the future.”

Previously, state corporations and groups were required to immediately sell out $376 million of the $1.6 billion in the accounts according to the central bank’s request.

In a recent meeting, Nguyen Quang Huy – director of Foreign Exchange Management Deparment of SBV said that state corporations and groups selling out dollars has contributed to stabilising the foreign exchange market over the time. Currently, the central bank is drafting a rule on purchase and sale of foreign currency with the aim to expand further member enterprises as state-owned enterprises beside state corporations and groups. Thus, the supply of foreign currency from banks will continue to increase. – Thanhnien

Tags: Vietnam forex market