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SBV commits to strong measures to lower exchange rate
The State Bank of Vietnam (SBV) has vowed to take strong measures to stabilise the foreign currency market and stop the dollar price fever which began two weeks ago.
An official of SBV on June 5 in the afternoon told the press that the central bank will release a document today, June 6, asking commercial banks to inspect their foreign currency agents to discover speculation activities, considered one of the main reason behind the dollar fever.
Sources say that the police have also joined forces with relevant ministries to uncover speculation activities being carried out to push prices up for profit.
The dollar price yesterday soared to VND18,500/US$1 in Hanoi, or 14% higher than the interbank rate announced by the State Bank of Vietnam (VND16,117/US$1). The rate quoted by commercial banks was VND16,278/US$1.
Tran Bac Ha, Chairman of the Bank for Investment and Development of Vietnam (BIDV), said that this is not owing to international investment and payment imbalance, but rumours and speculation.
“The State Bank should make stronger commitments to provide foreign currencies for commercial banks. With the current foreign currency reserves, the central bank is absolutely capable of intervening in the market,” Ha said.
The State Bank of Vietnam has sent the message that it can ensure enough foreign currencies for the national economy, especially for importing key products like petroleum and fertiliser. However, commercial banks will not provide foreign currencies to serve the import of luxury products.
According to Ha, rumours about possible VND depreciation arose from the fact that Vietnam needs more foreign currencies to pay for imports. Reports about Vietnam’s economy released recently by international institutions, discussing the shortcomings of the economy, have also prompted people to hoard dollars for fear of the depreciation of the VND.
Moreover, the demand for dollars on the black market has really been increasing over the last few days, as importers of luxury products like cars, who cannot buy dollars from commercial banks, have been trying to collect dollars on the black market.
Ha said that foreign currencies are still flowing into Vietnam from foreign direct investment, overseas remittance and tourists. These prove to be big sources of dollars, which contribute to stabilising the market.
The dollar price unexpectedly began increasing more than two weeks ago. After the State Bank of Vietnam announced it would make every effort to stabilise the prices, the VND/US$ exchange rate decreased by 800 points on May 28. However, the dollar price has been escalating since then, with occasional daily increases of VND500-600/US$1.
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