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Foreign currency market still bearing hard pressure
Export companies continue keeping the dollars they earn from export contracts on their accounts and refusing to sell dollars to banks, thus putting a hard pressure on the dollar supply.
The dollar price has been increasing further since early this week on the gold price hike. One dollar was converted into 21,100-21,250 dong on Monday. As such, the dollar has become 50-100 dong more expensive than in early November 2010.
The big gap between the exchange rate on the black market and the rate officially quoted by commercial banks has led to the situation where banks cannot persuade businesses to sell dollars to them.
Ho Huu Hanh, Director of the HCM City Branch of the State Bank of Vietnam, said that the amount of dollars kept by businesses on their bank accounts has reached nine billion dollar. If banks could purchase that amount, the supply would be much improved, and banks would have dollars to sell to other businesses.
However, there is no sign showing that export companies, which have the income in dollar intend to sell them to banks. Even when the State Bank of Vietnam has committed not to adjusting the dong/dollar exchange rate until the end of the year, the businesses still do not want to sell dollars to banks.
Statistics show that while more capital in dollars is flowing to banks, the volume of dollars banks can purchase is always lower than the volume they sell. The banks in HCM City, for example, purchased 5212 million dollars in October, while they sold 5518 million dollar in the same month.
On the official market, the dong/dollar exchange rate was quoted at 19,470 dong per dollar by commercial banks. However, businesses cannot purchase dollars at the quoted price.
Banking experts said that many enterprises have to buy dollars at the prices higher than the quoted prices and the ceiling prices, but it is unavoidable, because the demand for dollar is increasing in the last months of the year, when businesses need more dollars to pay for imports.
“Commercial banks can play tricks to legalise the sales of dollars at the prices higher than the quoted prices,” Hanh admitted, adding that it is not easy for management agencies to discover the violations of commercial banks, unless businesses report the cases to the management agencies.
Under the request by the State Bank of Vietnam, commercial banks need to prioritise sellingdollars to the clients withearnings in foreign currencies, or the enterprises, which import essential goods. However, according to Dau tu, it is very difficult to control the sale of dollars and to supervise banks to ensure they sell dollars to serve the right purposes.
A senior banking official said that even a prestigious bank based in HCM City violates the regulations. The bank opened an L/C (Letter of credit) for an enterprise to import 3G phones. When the case was discovered, the payment was completed. “The case has fallen into oblivion, while the bank was not punished, because there is no provision about the punishment,” the official said.
In principle, the dollar supply can be improved when kieu hoi (Overseas remittance – Vietnamese people, who live and work in foreign countries, send foreign currencies to their families and relatives in Vietnam) arrive in the last months of the year. The volume of kieu hoi is expected to reach four billion dollar in HCM City. But analysts have warned that banks would not be able to purchase the dollars from kieu hoi receivers, because the receivers would rather sell them on the black market than to banks.
When asked to comment on the continued dollar price increases in Vietnam, Louis Taylor, a senior executive of Standard Chartered Bank, in charge of Vietnam, Laos and Cambodia markets, said on Thoi bao Kinh te Saigon that in principle, the local currency will lose its value when it suffers from the trade deficit.
However, the bank thinks that the depreciation of the dong will be eased in 2011 and the dollar price would be 20,800 dong per dollar by the end of the year. The bank also believes that the dong may appreciate again from 2012, because the high economic growth rate of Vietnam will attract foreign investors back.
Nhu Ngoc
vietnamnet
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