Banks’ US dollar supply under pressure

There have been some signals of pressure on US dollar supply at commercial banks in HCM City, reported State Bank of Vietnam (SBV)’s HCM City branch.

Particularly, the total amount of US dollar banks have bought were mainly from other credit institutions, accounting for 47 percent of the total amount of foreign currency purchase while the amount of US dollar being bought from economic organisations accounted for only 40 percent, 3 percent from SBV and the remaining amount was from other sources such as remittance and foreign currency exchange.

According to analysis from SBV’s HCM City branch, consumer price index (CPI) in September increasing 1.31 percent along with the central bank’s depreciation of dong against US dollar on August 18 made enterprises tend to hold US dollar and do not sell to banks. Meanwhile, the payment demand for imports and mature foreign debts is increasing more and more.

Additionally, the deposit rates of US dollar and gold at banks are increasing plus the gold price exceeded the threshold of 30 million dong per tael, causing heavy impacts on psychology of depositors, making tendency of holding US dollar and gold increase.

As reflected by enterprises to SBV’s HCM City branch, there are some joint stock banks selling US dollar exceeding the allowable ceiling price of 19,500 dong per US dollar.

As reported, some banks sold US dollar at 19,550 dong, the remainder 50 dong was collected as fee for foreign currency transaction. Meanwhile, the US dollar selling price in the free market nearly touched the threshold of 20,000 dong on October 6.

A leader of SBV’s HCM City branch said that the major reason is due to the too high gap between the domestic gold price and the world price. Currently, the domestic gold price is higher than the world price by one million dong/tael. Thus, the demand of purchasing US dollar in the free market for illegal import of gold rises, pushing up the US dollar price.

Currently, commercial banks are limiting lending in both dong and US dollar for importers of goods that can be produced in the country under the guideline of SBV aiming to curb the increasing demand of US dollar. – TBKTSG

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Posted by VBN on Oct 7 2010. 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

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