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Increased demand pushes US dollar up against the dong
A US dollar has cost more than 17,200 dong on the black market in recent weeks, while the official exchange rate has reached almost 17,000 – the upper reaches of the daily trading band.
The daily trading band is now at plus or minus 3 percent against the interbank rate. On Dec. 10, the State Bank of Vietnam listed the interbank rate at 16,491 VND per US dollar, so banks were not allowed to charge more than 16,985.73 or less than 15,996.27 VND for the greenback.
State-owned BIDV listed its buying-selling prices at 16,985/16,986 VND and Agribank’s price was 16,920/16,987 VND.
Vietcombank listed its buying-selling prices at 16,980/16,986 VND.
The buying-selling prices for joint stock banks such as the Asia Commercial Bank, Eximbank, Sacombank and Techcombank was about 16,970/16,986 VND to the dollar, up about 200 VND over early last month.
The interbank rate has remained around 16,490 VND, so exchange rates at commercial banks have stayed right at the upper cap.
Pham Thanh Ha, head of the treasury department of Vietcombank said that the bank was able to meet market demands of the US dollar, but he also said that the demand for the greenback had been increasing remarkably.
“However, if the demand keeps going up more and more, I think the trading band of plus or minus 3 percent will not be okay anymore. We now have to buy dollars lying around at rather high prices, and people don’t want to sell if we don’t offer higher prices,” Ha said.
“Bank are only bridges to the financial market. We have to buy dollars lying around and then sell to those who need it,” he said.
But even when banks listed spot exchange rates below the upper cap of the trading band, some enterprises reported having to buy US dollars at some banks in Hanoi at about 17-17,100 per US dollar.
In the numerous foreign exchange bureaus and gold shops on Hanoi’s Ha Trung and Tran Nhan Tong streets, the dollar was sold for 17,200/17,300 VND on Dec.10.
In the non-deliverable-forward, or NDF, market – where investors anticipate the value of currencies – the monthly cost of the US dollar is expected to rise to 17,520 VND – up 200 VND against early November. The numbers are expected to climb to 18,270 VND for three months. The dollar is expected to cost 20,015 VND by December next year.
The recent appreciation of the US dollar has been blamed on a short supply of the greenback on the local market.
A senior official at the SBV said one of reasons for the US dollar appreciation Vietnam ’s huge trade deficit. According to the General Statistics Office, the deficit in the first 11 months of the year reached nearly 17 billion USD compared to the total figure of 12 billion USD last year.
Another important reason for the appreciation of US dollar was the temporary paucity of imported gold, which was believed to cause gold smuggling across the border which then increased demands on US dollars for payment.
High demand on US dollars at foreign banks, estimated to be 40 million USD per day, was also blamed on the US dollar appreciation. The higher rate was also attributed to public sentiment and speculation.
Many believed that the remittance sent to Vietnam by the end of this year would not be large, due to the ongoing global financial market turmoil, particularly in the US .
According to World Bank staff’s estimation in November, based on the International Monetary Fund’s Balance of Payments Statistics Yearbook 2008, Vietnam is expected to receive 5.5 billion USD of remittance. This number is the same volume as 2007, while local economic situations need more US dollars to deal with challenges. The State Bank of Vietnam ’s deputy governor Nguyen Dong Tien did not comment on this remittance figure.
vna
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