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Central bank reverses weaker dollar trend
The central bank listed buying and selling rates for the US dollar yesterday for the first time in a month.
The State Bank of Viet Nam's head transaction office quoted the buying price at VND22,300 and the selling price at VND22,511 per dollar, in a bid to prevent the dong from strengthening further in the domestic market.
The last time the central bank listed dollar rates was December 31, when the buying rate was VND21,800 a dollar and the selling rate was 22,475.
It also raised the mid-point reference rate, whose trading band is plus or minus three per cent, by two dong at VND21,894 per dollar yesterday. This was the second consecutive rise of the rate this week, following Monday's 11 dong increase.
Following the central bank's moves, the dong weakened at commercial banks.
Vietcombank raised the rates by 95 dong yesterday morning, listing the buying price at VND22,260 per dollar and the selling price at VND22,330 per dollar.
The rates were 50 dong higher at Eximbank, which bought a dollar at VND22,230 and sold it at VND22,320.
At Techcombank, the buying rate rose by 60 dong to VND22,120 per dollar and the selling rate was 130 dong higher at VND22,250 per dollar.
Dollar rates fell significantly last month in both official and parallel markets, with commercial banks listing exchange rates that were up to VND300 lower than those recorded late last year.
The rates even hit three-month lows at between VND22,320 and VND22,390 per dollar in late January, despite a rise in the central bank's reference rate at that time.
SBV Monetary Policy Department Director Bui Quoc Dung attributed the reference rate rise to the impact of the global market, including the devaluation of the yuan, a decline in the Chinese securities market and a rise in US dollar value.
As for the decline in exchange rates at commercial banks, he said it was because of a positive response from the market to the new exchange rate policy, which had helped reduce dollar speculation in the domestic economy and encourage organisations and individuals to sell the greenback to banks.
He added that these developments had helped create good liquidity in the domestic foreign exchange market for the past few weeks.
Industry insiders said the central bank returning to quote the dollar rates yesterday could be translated as it was preparing to buy foreign currencies to compensate for the nation's foreign reserve, a significant amount of which had been sold for market intervention during the second half of 2015.
The central bank began applying a daily-adjusted "central rate" this year, instead of maintaining a fixed reference rate for a long period of time.
It said the new mechanism would enable it to ensure its management objectives, while letting the exchange rate move flexibly as per global monetary fluctuations.
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