HCMC – The U.S. dollar has become weaker against the local currency as a number of commercial banks cut the exchange rate due to the redundant U.S. dollar supply at home. The similar situation is also seen on the black market.
The central bank on Thursday continued maintaining the exchange rate on the inter-bank market at VND20,828 to the dollar, and given the trading band of 1%, the ceiling rate at commercial lenders was some VND21,036. However, the prices quoted by most local banks were below the ceiling rate.
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 Tet.
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, shrinking by up to VND350 over end-January and a fall of about VND100 against Wednesday.
An executive of a large bank in HCMC specializing in financing foreign trade enterprises said the dollar volume at his bank was quite ample. It is because of stronger public confidence in the exchange rate stability, and this has eased the demand for foreign currency holdings, he explained.
According to the banker, local exporters tended to sell U.S. dollars to lenders to enjoy higher interest rates set for Vietnam dong deposits.
Similarly, local residents no longer want to keep foreign currencies due to this year’s forecasts that the U.S. dollar/Vietnamese dong exchange rate should not change by more than 3%, the banker said. He asserted this had led to a considerable rise of foreign currency supply, helping his bank meet foreign currency buying and lending needs of importers.
The same situation was seen at Viet A Bank. A leader 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 U.S. 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 Vietnam dong is one of the reasons causing the exchange rate to strongly go down after Tet. The bank said the scarcity of Vietnam dong forced industry players to avoid buying huge volumes of dollars.
Similarly, economist Vu Dinh Anh told the Daily that numerous lenders were facing a shortage of the local currency while holding too much foreign ones.
