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Hanoi dollar transactions halted unexpectedly
Foreign exchange points in the northern capital city of Hanoi unexpectedly stopped transactions of U.S. dollar Monday afternoon even though commercial banks asserted they had yet to formulate a policy on controlling their foreign exchange networks.
Early in the morning, foreign exchange points remained in normal operation, announcing the trading rate at VND21,500-21,680/US$1. They, however, refused to buy the dollar and stopped all dealings in the afternoon.
Ha Trung, a street well-known for gold and foreign currency trading, looked duller than usual in the morning. While many shops traded mainly gold, especially jewelry gold, others suspended all foreign currency transactions.
Quoc Trinh Jewelry Company, normally crowded with customers dealing in foreign currencies and gold, looked rather quiet that morning. During the afternoon, it sold mainly jewelry gold and took in a small quantity of gold.
Nguyen Kim Hanh, who lives in Me Tri (Hanoi) and trades “portable” cosmetics on the internet, said she went to Ha Trung to buy U.S. dollars for importing goods but the shops had ceased all dollar transactions and she had no idea where to buy them.
Half way through the morning, Bao Tin Minh Chau Company Ltd. suspended its foreign exchange services. Its notice said the company would no longer trade and exchange foreign currencies at its three outlets in Hanoi.
An employee of Bao Tin Minh Chau’s branch on Cau Giay Street said most people came to the shop in the morning for U.S. dollar transactions before the shop displayed the announcement. Almost no one traded foreign currencies after 11 a.m. According to the employee, it remains unknown when the company will resume its foreign currency operations.
Intimidating rumors about unauthorized dollar dealing, a representative of a shop in Hanoi explained, arose last Friday. Some said the State Bank had begun its strict inspections on foreign exchange points, and dealers repeatedly informed each other of the results of state management agencies’ meetings on this issue.
Adding to the rumors, many traders said they heard the police had started checking foreign exchange points for any possible violations.
Many people observed that the dollar prices on the free market these days continue to drop, causing disadvantages for businesses. Many forex services providers, on the other hand, no longer care about dollar trading and stop their transactions.
“So far, vague information that causes market anxiety is common. So far, what has been responsible for causing market anxiety and the breakdown in dollar transaction is the lack of information,” said the owner of a dollar trading point.
Representatives of banks with major market shares for foreign currency trading such as the Joint Stock Commercial Bank for Foreign Trade of Vietnam (Vietcombank) and Vietnam Joint Stock Commercial Bank for Industry and Trade (Vietinbank) said they had yet to request their foreign exchange agents to cease operations.
Shop owners, however, they said, were probably concerned about possible strict inspections of state management agencies and decided to close temporarily to avoid risks.
An official from Vietinbank said his bank streamlined its foreign exchange network under the State Bank’s regulations in 2007-2008. Currently it has only a few dozens of agents and the foreign currency inflow from this channel is insignificant.
The Vietcombank’s representative said the number of this bank’s agents has also been reduced considerably after 2008 and only a few dozen remain operational in Hanoi.
This is not the first time such phenomenon has occurred on the currency market. In November 2009, when gold and U.S. dollar prices fluctuated uncontrollably, the dollar price reached its record high at over VND19,500 for US$1. The market chaos gave rise to rumors that state agencies were intensifying their inspection campaigns, causing foreign exchange points to cease dollar transactions to avoid losses due to the price disadvantage against them.
Sometimes later, trading resumed as usual.
Many investors with dollar stocks seem unworried. Chieu, an investor, said the market would be normal again after a few days.
One representative of a company remarked that the freezing of free (Unauthorized) dollar transactions would pull down the gold price in the following days.
When a number of free foreign currency transaction points suspended operations on Monday morning, it has created a big problem, said people who usually trade foreign currencies on the free (Unofficial) market.
Binh, who often buys U.S. dollars at Bao Tin Minh Chau Company said people with a demand for dollars like him would certainly face difficulties when many banks did not sell foreign currencies to individuals and free dollar transaction services were not available.
At present, he said, the dollar’s selling price on the unofficial market remains higher than the banks’ offered rate, commonly at VND21,500-21,650 for US$1, but people accept the deal because of fast transaction speed and no requirement to prove their purpose of use.
Meanwhile, in Ho Chi Minh City, foreign exchange shops remained operational on Monday this week. Few people went there for transactions partly due to the big price difference. In the afternoon, the dollar’s selling and buying prices stayed at VND21,600 and VND21,700.
tuoitrenews, VnExpress
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