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Vietnam vows no compulsory forex sales
Companies operating in Vietnam will not have to sell their foreign currencies to banks this year, a state-run newspaper quoted a central bank deputy governor as saying on Wednesday.
The State Bank of Vietnam had considered forcing firms to convert forex into the local currency to help alleviate a shortage in dollars due to hoarding by companies expecting the dong to depreciate.
"The State Bank of Vietnam will not force foreign-invested companies as well as all domestic firms to sell forex," Deputy Governor Nguyen Van Binh was quoted by Securities Investment magazine as telling a business meeting in Ho Chi Minh City.
Binh said the central bank had determined how it would regulate of the foreign exchange market for the rest of 2009. He said the plan excluded compulsory forex sales, but gave no other details.
He made the comment on Monday while addressing a query from the business community, which had lobbied the central bank to skip the ruling. Many companies say they are short of dollars.
Last month Binh said the dong was expected to fall against the dollar by up to 6 percent in 2009 but that authorities had sufficient foreign exchange to meet demand.
Ashok Sud, head of a group of international financial institutions that make up a banking advisory group, said the central bank should intervene more directly with its reserves or "put some conditions on FX owners", according to minutes of an April meeting.
In those minutes, Binh said the central bank had not ruled out "forced surrender" of forex.
In May, Governor Nguyen Van Giau said the central bank saw no need to adjust the dong's exchange rate against the dollar.
The dong has faced pressure because of a dollar shortage, partly because Vietnamese are hoarding the U.S. currency.
Bankers said on Monday residents would need to see central bank action to ensure a stable exchange rate so that they would not need to keep dollars as a hedge against a possible speedy devaluation of the dong.
vietnews, Reuters
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