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It will be impossible to eliminate black dollar market: Expert
No economy in the world can get to the root of non-banking foreign currency market. Vietnam should not expect to absolutely eliminate the free market, said Huynh Buu Son, a well known economist in Vietnam.
Son talks with VietNamNet’s Vietnam Economic Forum about the current foreign currency market and about why the black market has become paralyzed in the last few days.
What would you say about the fact that the free market has halted transactions for the last several days?
This should be seen as a precarious reaction of some foreign exchange shops to the information that the State Bank of Vietnam and relevant agencies will inspect the shops. Some authorized foreign exchange shops fear that they may be discovered as making transactions at the exchange rates which are higher than the exchange rates allowed by the State Bank. If they have to collect foreign currencies at the stipulated prices, they will not make a profit.
The halting of transactions on the free market is not a problem at all because this does not mean that there is a shortage of foreign currency. People should not panic about the news.
Were transactions ever interrupted in the past? You know, even the licensed foreign exchange agents have also halted transactions?
Such a thing has not happened in recent memory, but it once happened in the past. However, the transactions were interrupted for a short only.
Currently, many enterprises and individuals, who have demand, cannot buy foreign currencies on the official market and they have to seek foreign currencies on non-official market. Some sources said that in an effort to tighten the foreign exchange market, the central bank will narrow the network of foreign exchange shops. What would you say about that?
People, who have demand for foreign currencies, can go directly to commercial banks. After the latest dong/dollar exchange rate adjustment, the gap in the foreign currency prices in the official market and the free market has narrowed. Therefore, banks are opening their doors more widely to satisfy the demand from enterprises and people.
The State has called on export companies, big economic groups to sell foreign currencies to banks, so that banks can have foreign currencies to meet legitimate aspirations by businesses and individuals. To date, no congestion in the dollar supply has been reported.
Some experts say that the black market has been interfering with foreign currency and it is necessary to settle the problem immediately. Meanwhile, businesses do not want this. They say if the black market is eliminated, they will have no other source to seek foreign currencies. What would you say about that?
No economy in the world can get to the roots of the non-banking foreign currency market, including the US or China. Vietnam should not expect to absolutely eliminate the free market.
In fact, dollarization will always exist, and we can just try to ease dollarization level. The level of dollarization depends on many factors, including the gap in the prices between the official and free markets. If the gap is narrowed, people will choose to purchase and sell foreign currencies on the official market. When the market operates well and when we have reasonable exchange policies, we will be able to narrow the black market. Meanwhile, it will be very difficult to eliminate such a market.
Pham Huyen
vietnamnet
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