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Dollar price skyrocketing, again
The dollar is now seeing a new price hike wave with the dollar price unexpectedly soaring since the beginning of the week.
On May 6, the selling price of the dollar quoted by commercial banks was VND16,145/US$1, an increase of VND20/US$1 over the closing price before the April 30 holiday. This represents the second-sharpest rice increase so far this year (the first one occurred from March 20-31).
The sale price was the highest possible level (the trading band is now +/-1%, which means the VND/US$ exchange rates applied by commercial banks can be 1% higher or lower than the official exchange rate announced by the State Bank of Vietnam).
On the black market, the dollar price has surged to VND16,200/US$1.
With such a high price of the dollar, the VND/US$ exchange rate has hit the highest peak so far this year, even higher than the VND16,120/US$ threshold, which was recently maintained for several months.
Prior to that, the State Bank of Vietnam reported that the demand for foreign currencies was going up due to the higher demand for dollars from import companies. The higher demand for dollars is always seen in this period of recent years.
In the April report by the State Bank, it said it would continue selling foreign currencies to commercial banks to meet the increasing demand. The central bank also affirmed that the foreign currency supply and demand has been stabilised since the price fluctuation from March 20-31.
Nevertheless, the happening on the market shows that a new wave of dollar price increases is nearing.
Earlier this month, the State Bank of Vietnam granted additional gold import quotas to some commercial banks and gold trading companies. Five of the banks and companies are planning to get 3,500 kg of gold with the world’s prices experiencing the sharpest price decreases since the beginning of 2008. This means that a big volume of dollars will be spent to import gold (If 3,500 kg of gold are imported, Vietnam will have to spend some $100mil. This does not include the gold to be imported by other importers).
There is another reason that has led to the dollar price increases: the withdrawal of government money now deposited at commercial banks. It remains unclear about the sum of deposited money, but experts guess that this is a very big sum of money with a high percentage of foreign currencies. It is estimated that nearly $1bil is being deposited at Vietcombank alone.
Nguyen Hoa Binh, Chairman of Vietcombank, said that the transfer of money from banks to the central bank will not much influence the operation of banks. However, analysts say that this will certainly affect the foreign currency position of the bank.
The recent dollar price increases remain controllable, and the VND/US$ exchange rate is still within the line set up before by the State Bank of Vietnam. According to the General Statistics Office, the dollar price fluctuations have not exceeded +/-1%, the level which has been maintained for the last few years.
VNN
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