VIETNAM - Inter-bank exchange rate slightly up

by lexie Thu Dec 15, 2011 5:55 pm

December 15, 2011

Inter-bank exchange rate slightly up

The State Bank of Vietnam on Wednesday revised up the inter-bank foreign exchange rate by another VND10 to VND20,813 to the dollar, prompting commercial banks to quickly raise the trading rate to the cap of VND21,021.

The adjustment of the inter-bank rate, which has stayed put for over one month, pushed the greenback up by 0.9% against the local currency compared to early September when the central bank’s governor pledged to keep the rate not to exceed by more than 1% in the rest of the year.

Given the permitted trading band of 1% either side of the formal inter-bank rate, several commercial banks have immediately pushed up their quoted rates. Bank for Investment and Development of Vietnam (BIDV) and the Vietnam Export Import Commercial Joint-Stock Bank (Eximbank) raised the spot rate to VND21,021, while Bank for Foreign Trade of Vietnam (Vietcombank) alone bought the U.S. dollar at VND21,015 and sold it at VND21,019.

The dollar traded outside banks, meanwhile, has eased, closing the gap with the formal rate. The greenback on Wednesday was traded at about VND21,150 and VND21,200 for buying and selling respectively on the free market, or merely around VND200 a U.S. dollar higher than that quoted by commercial banks.

Numerous shops in HCMC have stopped changing foreign currencies following Decree 95/2011/ND-CP issued by the Government on Oct 20, under which administrative sanctions were increased to VND500 million from VND70 million for illegal foreign currency trading activities.

According to Ban Viet Securities, local residents have shifted to selling the greenback to commercial banks, allowing the U.S. dollar supply in the banking system to be considerably replenished.

The local foreign currency supply has also swollen thanks to a possible US$3 billion surplus from the balance of payments, resulted from overseas remittances worth US$9 billion flown into the country this year as predicted by the World Bank. On top of that, the nation has witnessed its trade deficit sharply shrinking during the last month.

The narrowing gap of foreign exchange rates between the inter-bank market and the black-market is a positive factor and thus the rates will not be strongly fluctuating as it was in February this year, Ban Viet noted.

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