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Dollar strengthens against dong
Increasing demand for the US dollar and a supply shortage has pushed the currency up against the Vietnamese dong, according to Le Dac Son, general director of the Vietnam Commercial Bank for Private Enterprises (VP Bank).
The buying and selling rate for the US dollar on HCM Ciyt open market on Dec. 22 was 17,250 VND and 17,300 VND respectively, an increase of 50 VND over late last week.
The State Bank of Vietnam (SBV) on Dec. 22 listed the inter-bank exchange rate at 16,498 VND per US dollar, with the daily trading band is now at plus or minus 3 percent, so banks are not allowed to charge more than 16,992.94 or less than 16,003.06 VND for each dollar.
Falling export and tourism earnings and remittances from overseas Vietnamese are two main factors leading to the dollar shortage in the market.
Remittances this year have increased by 2 billion USD over last year, but reduced remarkably this month due to the ongoing global economic recession, thus affecting supply, Son said.
In recent months, earnings from exports and hospitality sectors have also dropped heavily.
With people expecting the interest rate of dong deposits to fall further, many are shifting to invest in the greenback.
Besides, with the global economic downturn, many kinds of goods are becoming cheaper, and local enterprises are taking advantage of the opportunity to import machinery and equipment as well as other items, which increase the demand for US dollar.
The slashing of the benchmark interest rate by the SBV has also made the value of local currency reduce against the dollar.
In the global market, after the US Federation Reserve cut its benchmark interest rate, the US dollar has depreciated against other countries’ currencies.
In Vietnam , in an effort to stimulate exports, SBV has still maintained the exchange rate, and this has also been a factor in the appreciation of the US dollar against the dong.
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