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Commercial banks not allowed to withhold dollar sales: SBV
The central bank will take measures to deal with commercial banks that try to hold back their dollars to avoid selling within the permitted trading band, Governor Nguyen Van Giau said Sunday.
In a meeting with the Young Businesses Association, Giau said the central bank has ordered commercial banks to ensure that their forex trading abides by the regulations.
The State Bank of Vietnam has caught one bank trying to sell the dollar at rates outside the trading band and [punitive] measures against this bank would be taken, the governor said, without naming the bank.
The central bank had warned last Wednesday that commercial banks are not allowed to use derivatives to trade dollars at rates outside the official trading band, and offenders would be punished.
The central bank had already banned last June the use of third currencies to circumvent a trading band running 3 percent on either side of a midpoint it sets each day. But bankers say that in practice, some traders have been using a range of methods, including currency options and third currencies, to trade dollars and dong outside the band at rates many see as more market-oriented.
One day after the central bank decision, bankers said dollar trading by commercial banks could grind to a halt. As most banks have bought foreign currencies at rates outside the trading band, they do not want to sell the currencies at official rates now, bankers said.
“A dollar scare seems to come back just like a year ago, pushing the forex rates upwards,” Nguyen Thanh Nhon, deputy chairman of the Young Businesses Association, said at the meeting.
Nhon said association members now have to buy the greenback at higher rates on the black market to pay for their goods.
The unofficial rate Sunday reached VND17,800 for a dollar while the rate listed by Vietcombank was VND17,490.
Tran Hoang Ngan, an economist at the Ho Chi Minh City University of Economics, said the recent hike in the dong/dollar rate is because of speculation that the government will allow the dong to fall against the dollar.
Ngan, also a member of the National Advisory Council on Monetary and Financial Policies, said this expectation has pushed the unofficial dong/dollar rate higher than the trading rate at commercial banks a year ago by 20 percent.
The dong last week remained little changed from the end of 2008.
Out of reach
The Young Businesses Association said at the meeting Sunday that its members have found it difficult to obtain loans at interest rates lower than 10.5 percent, the maximum rate that commercial banks are allowed to charge.
The government had decided in January to use VND1 7 trillion (US$970 million) from an economic stimulus package to provide a 4-percent interest subsidy on loans to companies that export, import or produce essential goods.
Most commercial banks are lending at 10 percent per annum and if businesses are eligible for the government subsidy program, they only have to pay 6 percent interest on their loans, Giau said in a central bank statement on March 16.
Song Long Food Company, a member of the association, said a commercial bank agreed to lend it at the subsidized rate. The company, however, failed to have the loan guaranteed by Vietnam Development Bank, or VDB, due to differences in assessment and criteria between the two banks. VDB has been tasked to guarantee unsecured loans made by firms eligible for the government loan subsidy.
As of last Friday, commercial banks had lent a combined VND151.9 trillion ($8.67 billion) to businesses at subsidized rates, a 5.26 percent increase over a week earlier, according to the State Bank of Vietnam.
Minh Quang - Thanh Xuan
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