Vietnam - Dollar rise hinders imports for Tet holiday

by lexie Tue Nov 15, 2011 12:14 pm

November 15, 2011

Many firms said they would not import too much goods for the Lunar New Year holiday, or Tet, due to the dollar price hike while economic uncertainty may pull down consumption this year.

Speaking to the Daily, a deputy director of the food additive import company N.K.C said the firm is running into trouble due to the high dollar price at VND21,414. Besides, banks are not keen on selling the greenback, even to regular customers.

The company has opened letters of credit for five imported containers. However, the banks where the import firm has accounts have hindered the process for customs clearance, requiring the firm to undergo many procedures to pay for the imported goods.

Meanwhile, a representative of Duy Tan Plastic Company said the firm had been warned of the difficulty in dollar buying and borrowing for import. Therefore, the company has decided to just import necessary material for production from now to Tet holiday.

According to a banker in District 1, HCMC, the city has sufficient foreign funds but at high prices. In addition, banks are cautious about dollar trading due to the complicated procedures.

Credit institutions have been requested to report to the central bank about their foreign currency trading. Moreover, the central State Bank of Vietnam will probably launch inspections on these activities in the coming days.

Truong Van Phuoc, general director of Eximbank, agreed that the U.S. dollar market was less tense as the dollar deposit rate was capped at 2%, resulting in people selling the dollar to get Vietnam dong for depositing at banks instead. Also, people now choose to sell dollars to banks because the unofficial market has recently been scaled down.

Other sources like the balance of payments surplus and the rising remittances from abroad to the country have also helped ease the dollar shortage.

A bank teller said the dollar was currently quoted at VND21,200 for buying and VND21,400-21,500 for selling at his branch. The prices fluctuate depending on the relationship between the bank and its clients, and on the latter’s prestige and health.

However, because many enterprises have reduced import, the demand for the dollar has subsided, said the teller.

The inter-bank average exchange rate last weekend was still VND20,803. The dollar quoted at Vietcombank was VND21,005 and VND21,011 for buying and selling respectively, unchanged from the previous week.

http://www.vietfinancenews.com/2011/11/dollar-rise-hinders-imports-for-tet.html