Vietnam - Dollar free market heats up again, despite close inspection

by lexie Tue Oct 25, 2011 11:40 am

October 25, 2011

Dollar free market heats up again, despite close inspection

The dollar free market is bustling these days since the dollar price has been escalating, and the demand for dollar has also been increasing.

Some months ago, people believed that the dollar free market was eliminated when the State Bank reinforced its inspection to gold shops and vowed to clear illegal dollar trading. However, the free market has heated up again. However, people have to be “smarter sellers and buyers” in order to escape State Bank inspectors’ eyes.

Tran, the owner of a gold shop at the Ben Thanh gold, silver and gemstone trade center in HCM City said that the demand for US dollars always increases towards the end of years. However, as central bank’s inspectors always keep a close eye over gold shops, both sellers and buyers have to keep cautious when making dollar transactions.

On the morning of October 19, Tran received a man, who came to ask for purchasing 1000 dollars. However, the saleswomen at her gold shop only counted money of the client, and Tran did not give dollars to the client. Tran called a dollar supplier, who appeared just some minutes later and delivered 1000 dollars to the client at Tran’s shop.

“The dollar supplier gave dollars, and the client gave dong to get dollars, face to face. If the transaction was discovered by inspectors, I would say that I did not get involved in the transaction, and my saleswomen only helped clients count money,” Tran said.

As Tet nears, which will fall into January of 2012, businessmen and merchants now rush to purchase dollars to make payment for imports. Observers say well known foreign exchange shops have the trading volume of tens of thousands dollars or nearly one million dollars a day.

Investors believe that they can make bigger profit if they trade dollars instead of gold. With the same sum of 43 million dong, those, who speculate gold, would make a profit of 300,000-500,000 dong per tael, while those, who buy dollars, would make a profit of 1 million dong.

Therefore, despite the risks, a lot of gold shops still keep trading dollars, though they have to be very cautious. Many shops have hired more security guards, who have to alert sellers and buyers when inspectors arrive.

Dollar traders have changed they way of doing business. Nguyen, the owner of the gold shop near the Vuon Chuoi market area, said that in the past, one officer could undertake two jobs – delivering dollars and getting dong. Meanwhile, nowadays, the two jobs are being undertaken by two different persons in order to avoid risks. When a client calls and asks for buying dollars, an officer would come to meet him and take dong from the client. After 5-10 minutes, another officer would come to deliver dollars.

The foreign currency exchange shop on Dong Khoi road in district 1, which has been well known to many HCM City’s dwellers, has also become more cautious in making transactions.

The salesmen here only make transactions right at the shops with loyal clients whom they well know. The quantity of dollars for every transaction is also modest, less than 10,000 dollars. If the loyal clients demand higher quantity, the salesmen of the shop will make appointments and bring dollars to the clients.

Meanwhile, the salesmen here would refuse to make transactions with unfamiliar clients, or they only accept to purchase dollars from clients at the prices quoted by commercial banks.

Ly, Chair of G Garment Company in HCM City said that he has sold 1 million dollars he got from a garment export contract in October, at the black market’s prices. Commercial banks could not purchase dollars directly from him at the prices higher than the quoted prices. Therefore, they converted the dollars into another foreign currency.

On paper, Ly sold money in the foreign currency to the bank (the State Bank only sets the ceiling price for dollars, not for other foreign currencies) at the negotiable prices.

“Of course, the bank helped me in dealing with procedures, and I had to share profits with the bank,” he said.

http://www.vietfinancenews.com/2011/10/dollar-free-market-heats-up-again.html#more