US dollar volume sold to banks below expectations

The US dollar volume that credit institutions have been able to buy from state enterprises is around $1.2-1.3 billion against the expected $1.6 billion.

July 4 is the third day from the the regulation on forcing SOEs to sell US dollar to banks being effective. The move is seen as the positive policy to reduce the US dollar hoarding of enterprises.

Yet, the volume of US dollar purchased from state companies will not increase extraordinarily and plentifully as expected.

At Saigon Hanoi Commercial JS Bank (SHB), one month before the regulation taking effect, enterprises had sold US dollar to the bank. In the second quarter, the volume of US dollar SHB could buy doubled against the previous quarter, so US dollar deposits at SHB remained modest after July 1.

From July 1, only 10-15% of total US dollar deposits were sent at SHB…After deducting liabilities or payment plans, the ratio is only 4-5% being able to be sold to SHB”, the bank’s Vice General Director Le Dang Khoa said.

Suddenly, the Central Bank requested commercial banks to total up US dollar deposits of 78 state companies in March, which totaled at $1.6 billion. However, specialists said, entire $1.6 billion is sold to banks.

Can Van Luc, Senior Advisor and Chairman of BIDV was quoted as saying that $1.6 billion was not much because they [state enterprises] will not have to sell 100% under Circular 13 because they are allowed to keep a part of US dollar volume after balancing short term demand. He estimated almost 22-25% of US dollar for that short-term demands, and $1.2-1.3 billion has been sold to banks.

Even, the figure of $1.6 billion will reduce because enterprises as well as residents shifted to deposit the dong instead of US dollar recently. The highest US dollar deposit rate applied on institutions is only 0.5% pa.

The above regulation contributes positive impacts to the forex situation in the market, helps reduce US dollar hoarding and fight against dollarization in the economy. – Vietbiz24

Posted by VBN on Jul 7 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