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Dollar shortage to pose danger toward year’s end
The demand for the U.S. dollar is outpacing supply, posing big risks for both enterprises and the economy by the end of the year, experts said at a conference in Ho Chi Minh City last week.
Le Xuan Nghia, Vice Chairman of the National Financial Supervisory Committee, told the conference on Thursday that dollar supply was ample now as borrowers converted their dollar debts to Vietnam dong funds.
But the risk is embedded in such a situation and will pose a big risk when such debts become due by the end of the year, he said.
Experts at the gathering observed that credit growth in the greenback is high, while remittances and foreign investment have declined, prompting foreign exchange volatility by the end of the year.
Remittances sent to Vietnam in the second quarter this year was US$1.9 billion, much lower than US$2.2 billion in the same period last year.
Foreign direct investment in the first six months this year was US$3.3 billion compared to US$3.4 billion in the same period last year.
In addition, foreign portfolio investment has also tumbled to only US$350 million in the first half this year compared to US$1.79 billion in the same period last year, Nghia said.
All such factors would undermine the forex balance in the coming months, with the most serious concern being a rush by enterprises to take out loans in the U.S. dollar.
“Enterprises have rushed to borrow loans in dollars then sell dollars to take Vietnam dong for business, giving way to a big dollar supply and thus stabilizing the forex rate in the last three months. When those loans become due, the dollar demand will be very high,” Nghia said.
The credit growth of the greenback in January-June was 23 percent while that of the Vietnam dong was only 3 percent.
Nguyen Duc Vinh, CEO of Techcombank, said that dollar loans had strongly increased in recent months while dollar mobilization at his bank was on the downtrend.
Therefore, banks recently have offered negotiated interest rates for dollar deposits, at up to 4-5 percent per year compared to the ceiling rate of 2 percent imposed by the central bank.
However, Nghia expected the central bank would stop this practice soon, and said the authority had bought over US$4 billion over the past few months which can be used for intervention in the market in case of forex upheavals.
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