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VIETNAM - US dollar drops against dong

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Post by lexie Mon Feb 13, 2012 3:33 pm

February 13, 2012

US dollar drops against dong


The US dollar has become weaker against the local currency as a number of commercial banks cut the exchange rate because of an oversupply of US dollars at home.


On the black market, the exchange rate has also gone down.


The central bank has continued maintaining the exchange rate on the inter-bank market at VND20,828 to the dollar.


Given the trading band of 1 percent, the ceiling rate at commercial lenders was some VND21,036. However, the prices quoted by most local banks were below the ceiling rate.


The Bank for Foreign Trade of Vietnam (Vietcombank) quoted the rate at VND20,860-VND20,930 to the dollar. The rate offered by Vietcombank was VND60 and VND80 lower than that in the previous day and down VND106 compared to January 30, the first trading day of credit institutions after the Lunar New Year holiday.


Vietnam Export Import Commercial Joint-Stock Bank (Eximbank) bought one dollar for VND20,860 and sold it at VND20,940, a drop of VND30 against the previous day for the buying rate and a fall of over VND100 against January 30.


ACB cut the respective rates by VND50 and VND20 to VND20,850 and VND20,930 to the dollar.


On the unofficial market, the dollar was bought at around VND20,800 and sold at VND20,900-VND21,000, dropping by up to VND350 compared to the end of January and a fall of about VND100 against previous days.


An executive of a large bank in HCMC specializing in financing foreign trade enterprises said the dollar volume at his bank was quite ample, because of stronger public confidence in the exchange rate stability.


He said this confidence had eased the demand for foreign currency holdings.


According to the banker, local exporters tended to sell US dollars to lenders to enjoy
higher interest rates for Vietnam dong deposits.


Similarly, local residents no longer want to keep foreign currencies because the exchange rate this year is forecast not to change by more than 3 percent, the banker said.


He said this had led to a considerable rise of foreign currency supply, helping his bank meet importers’ foreign currency buying and lending needs.


The same situation was seen at Viet A Bank. An executive of the bank said the public had rushed to sell dollars to his bank as a result of the narrowing gap in the exchange rate between banks and the unofficial market.


An executive of Saigon Thuong Tin Commercial Bank (Sacombank) revealed the abundant volume of foreign currencies at his bank coupled with slowing buying demand from importers had pulled down the exchange rate significantly.


“Our bank sometimes sells US dollars to corporate clients at a price lower than that quoted on the electronic board,” he added.


HSBC Bank (Vietnam) Ltd., in its monetary newsletter, pointed out the weak liquidity of the Vietnam dong is one of the reasons causing the exchange rate to drop significantly after Tet.


The bank said the scarcity of the Vietnam dong forced industry players to avoid buying huge volumes of dollars.


According to economist Vu Dinh Anh, numerous lenders were facing a shortage of the local currency while holding too much foreign ones.


http://www.vietfinancenews.com/2012/02/us-dollar-drops-against-dong.html

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