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Banks cash in on forex rates
A surprise move yesterday which saw several commercial banks raising dollar selling prices to the maximum permitted level and then reducing prices late in the afternoon triggered concerns about dollar trading in the system.
The State Bank of Viet Nam yesterday set the interbank rate at VND20.673,00 per US dollar, allowing commercial banks to trade the dollar between VND20,466.27 and VND20,879.73.
The selling prices at dollar-strong traders like Vietcombank, Eximbank, Sacombank and DongA Bank were at VND20,880 yesterday morning, or about VND270 higher than Monday's prices.
Prices were then cut to under VND20,800 per dollar in afternoon trading.
"The rate is quite normal," Vietcombank's Executive Board Member Le Thi Hoa told Viet Nam News in a phone interview yesterday. "Look at the buying and selling prices: there is a large gap. It's only when the two prices are the same, that there's a problem."
However, the decision to raise the dollar price to its maximum permitted level had not been taken since April 21 when the central bank injected flexibility into the interbank rate in line with market moves.
Le Duc Tho, Deputy General Director of Vietinbank, an institution which did not raise the dollar price yesterday, told Viet Nam News: "The price adjustment just depends on supply and demand on the market. Nearly 40 joint stocks banks are competing fiercely to do business so they have to keep a close eye on their prices."
Both Vietinbank and Vietcombank executives agreed that dollar sources and dollar trading at the banks were very good.
"Actually, it's very hard to say anything because of the inconsistent management of authorities," a senior expert with Ocean Securities told Viet Nam News. "Banks buy and they themselves sell dollars. They can do what they want because the black market is frozen."
Dealers on the non-deliverable forward (NDF) currency futures market yesterday traded the Vietnamese dong for next month at VND20,880.010.
The outright three-month rate was VND21,380.030 and the outright six-month rate was VND21,829.830.
The rate for outright 12 months was VND22,744.320 per US dollar, a change of 0.097-0.004 per cent against Monday.
On February 11, the central bank devalued the dong by 9 per cent to VND20,693 per dollar from VND18,932. It also narrowed the trading band around the midpoint to 1 per cent from 3 per cent.
This led to a general lowering of the interbank rate.
On the dong market, the repo interest rate on Open Market Operation (OMO) yesterday was up 1 percentage point to 15 per cent per year - the highest level since late April. However, Governor Nguyen Van Giau of the State Bank told Viet Nam News that this was nothing special.
"OMO is a market. The interest rate on the market keeps changing, depending on supply and demand," Giau said.
In the week from May 9 and 13, the State Bank of Viet Nam made a net injection of VND2.131 trillion (US$102.45 million) on OMO when it poured VND103.589 trillion ($4.98 billion) into OMO and withdrew VND101.458 trillion ($4.87 billion).
Since early May, the repo interest rate on OMO has stood at 14 per cent per year in accordance with the State Bank's new regulations.
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