Banks cash in on forex rates
The selling prices at dollar-strong traders like Vietcombank, Eximbank, Sacombank and DongA Bank were at 20,880 dong yesterday morning, or about 270 dong higher than Monday’s prices.
Prices were then cut to under 20,800 dong per dollar in afternoon trading.
“The rate is quite normal,” Vietcombank’s Executive Board Member Le Thi Hoa told Viet Nam News in a phone interview yesterday. “Look at the buying and selling prices: there is a large gap. It’s only when the two prices are the same, that there’s a problem.”
However, the decision to raise the dollar price to its maximum permitted level had not been taken since April 21 when the central bank injected flexibility into the interbank rate in line with market moves.
Le Duc Tho, deputy general director of Vietinbank, an institution which did not raise the dollar price yesterday, told Viet Nam News: “The price adjustment just depends on supply and demand on the market. Nearly 40 joint stocks banks are competing fiercely to do business so they have to keep a close eye on their prices.”
Both Vietinbank and Vietcombank executives agreed that dollar sources and dollar trading at the banks were very good.
“Actually, it’s very hard to say anything because of the inconsistent management of authorities,” a senior expert with Ocean Securities told Viet Nam News. “Banks buy and they themselves sell dollars. They can do what they want because the black market is frozen.”
Dealers on the non-deliverable forward (NDF) currency futures market yesterday traded the Vietnamese dong for next month at 20,880.010 dong.
The outright three-month rate was 21,380.030 dong and the outright six-month rate was 21,829.830 dong.
The rate for outright 12 months was 22,744.320 dong per US dollar, a change of 0.097-0.004 percent against Monday.
On February 11, the central bank devalued the dong by 9 percent to 20,693 dong per dollar from 18,932 dong. It also narrowed the trading band around the midpoint to 1 percent from 3 percent.
This led to a general lowering of the interbank rate.
On the dong market, the repo interest rate on Open Market Operation (OMO) yesterday was up 1 percentage point to 15 percent per year – the highest level since late April. However, Governor Nguyen Van Giau of the State Bank told Viet Nam News that this was nothing special.
“OMO is a market. The interest rate on the market keeps changing, depending on supply and demand,” Giau said.
In the week from May 9 and 13, the State Bank of Viet Nam made a net injection of 2.131 trillion dong (US$102.45 million) on OMO when it poured 103.589 trillion dong ($4.98 billion) into OMO and withdrew 101.458 trillion dong ($4.87 billion).
Since early May, the repo interest rate on OMO has stood at 14 percent per year in accordance with the State Bank’s new regulations. – VNS
Tags: Vietnam banking industry, Vietnam finance, Vietnam financial, Vietnam forex market