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VN ups forex reserve ratio, forces forex sales
Vietnam's central bank said on Wednesday it had raised the compulsory reserves banks must set aside for foreign currency deposits and it was forcing state-owned companies to sell their currency holdings to banks from July.
The moves will buttress efforts by the authorities to support the dong, although the Vietnamese currency has been more stable in recent weeks after a devaluation in February.
The State Bank of Vietnam raised the reserve ratio on non-term foreign currency deposits and on those with terms of up to 12 months to 7 percent from 6 percent, it said in a statement.
The rate for compulsory reserves on foreign currency deposits with terms longer than 12 months was raised to 5 percent from 4 percent, and the ruling came into effect for deposits from June, it said.
The U.S. dollar dominates banks' foreign exchange deposits but the higher reserve requirement may discourage them to some extent.
In a separate statement, the central bank said Vietnamese state-run companies will have to sell the foreign exchange from their deposit accounts and any other legitimate income to banks from July.
The currency in corporate term and non-term deposits as well as that arriving from July 1 will have to be sold to banks, the State Bank of Vietnam said in a statement on its website (www.sbv.gov.vn).
The move was aimed at preventing state owned companies from hoarding foreign currencies, especially during a "difficult" situation, a senior central bank official who declined to be named told Reuters .
"Currently, the dong is appreciating so companies are still selling dollars without this circular. But it aims to apply when the foreign currency market is in difficulty and the companies have an interest in holding dollars for higher rates," he said.
"This circular doesn't mean to make things tough for state companies, but it's the first step to prevent them from hoarding and manipulating foreign currencies," he said, indicating there could be further moves to stop such hoarding by companies.
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