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Governor: Businesses have begun selling dollars
Governor of the State Bank of Vietnam Nguyen Van Giau said that businesses have begun selling dollars to banks instead of keeping them in their accounts. He also said the downward trend of the dollar and the gold in the last few days proves that the central bank’s policies are going the right way.
The dollar price increased sharply right after the central bank announced the dong/dollar exchange rate adjustment on February 11 and has only decreased in the last two days. What would you say about this?
The latest exchange rate adjustment was made at a sensitive time. First, we anticipated some factors which would have negative impacts on the exchange rate, including the foreseeable price increases of petroleum and electricity. Second, there are always unpredictable factors. For example, the world’s crude oil price soared to $90 per barrel, while the gold price also soared to $1410 on February 22.
However, now I can say that the downward trend of the dollar and the gold prices in the last few days proves that the central bank’s policies are going the right way. A lot of big enterprises told me that they have begun selling dollars.
What is special about the latest exchange rate adjustment is that, unlike the other adjustments, the State Bank did not have to sell foreign currencies to intervene this time, i.e. that the foreign currency reserves have not been affected.
Some experts say that the main reason behind the “dollar fever” was the speculation of commercial banks. Though banks have profuse supply of dollars, they still refused to sell them to businesses? Why did the central bank not instruct them to sell dollars?
You should point out which banks have dollars and refuse to sell them to businesses. I know some banks could buy dollars from their sources, but if they promised to sell dollars 3-5 days after their purchase, they had to keep them. People should not jump into conclusions too hastily.
The State Bank of Vietnam says that the black market’s scale is very small, but in fact, it still interfers with the management policies. Why?
There are two problems we need to deal with. First, the laws must be obeyed. We must revoke licenses or impose punishments on the foreign exchange shops which operate contrary to the current regulations. Second, foreign currency traders must be forced to declare the turnover and pay tax. Illegal foreign currency trading shops must be cleared.
You have mentioned the need to reduce the total demand of the national economy in order to stabilize the monetary market. Could you please elaborate on this?
Reducing the total demand is a very important measure to stabilize the macro economy.
When reducing the total demand, we apply the “tightening the belt” policy. The credit growth rate must not be higher than 20 percent, while the budget overspending must not be higher than five percent of GDP.
The goals will be referred to by importers to make their decisions. This will help reduce imports and the trade gap, thus helping curb the inflation.
You have said that the credit growth rate must be less than 20 percent instead of 23 percent. How much less money will be put into circulation if the credit growth rate is reduced by three percent?
In the banking system, if the credit growth rate is higher by three percent, 70 trillion dong more will be put into circulation, and if the credit growth rate is higher by four percent, the figure would be 92 trillion dong. If counting in the impact of the fiscal policies, the figure would be 120 trillion dong.
vietnamnet, vneconomy
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