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Dong rises on speculation dollar supply will increase
The dong gained on April 16 on speculation the central bank will take steps to increase the supply of US dollars in the local financial system. Government bonds rose.
The State Bank of Vietnam is working on a proposal that would require the nation’s exporters to sell their foreign-exchange earnings to domestic banks, Thoi Bao Kinh Te Viet Nam newspaper reported on April 16, citing an official it did not identify. The monetary authority also has sufficient reserves to meet demand, the newspaper said.
“The short supply of dollars may ease,” said Vu Thu Ha, Deputy Head of foreign currency trading at the Vietnam International Bank in Hanoi. “The central bank is working on stronger measures.”
When contacted by Thanh Nien, the General Directors of three major commercial banks declined to reveal if banks had enough dollars to meet importers’ increased demands, saying the issue is “sensitive.”
Exporters, meanwhile, are reluctant to sell foreign currency to banks over expectation that the dollar would continue gaining as well as fear that they could not buy foreign currency from banks when required.
The dong traded at 17,783 a dollar as of 3:05 p.m. on April 16 in Hanoi, versus 17,794 on April 15, according to data compiled by Bloomberg.
At money changers, or the so-called black market, in Ho Chi Minh City, the dollar fetched 18,010 to VND18,050, compared with VND18,030 to 18,070 on April 15, according to telephone directory information service 1080.
The central bank fixed the reference rate for on April 16’s trading at VND16,938 per dollar, versus 16,939 on April 15, according to the central bank’s website. The currency is allowed to trade up to 5 percent on either side of the rate.
Bonds rise
The State Bank of Vietnam may intervene to support the local currency should speculators bet on gains in the dollar, and traders should be “very careful” to avoid losses, the newspaper said.
Five-year local-currency bonds gained, with the yield on the benchmark note dropping .01 percent to 8.96 percent, the lowest level since March 3, according to a daily fixing price from about 10 banks compiled by Bloomberg.
The State Treasury failed to sell VND1 trillion ($56.2 million) of two-and five-year bonds at a planned auction on April 16 because investors demanded higher returns than the state was prepared to pay.
The government offered a coupon of 7.6 percent for the two-year notes and 7.9 percent for the five-year securities, according to a statement from the Hanoi Securities Trading Center, where the auction took place. Bidders sought an interest rate of between 8.2 and 9.5 percent, it said.
thanhnien, bloomberg
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