Tensions remain on Vietnam’s forex market
August 16,2010
After disclosing the information about a payment account surplus of $ 3.4 billion in the first 6 months of this year, the State Bank of Vietnam, the country’s central bank has not made any more new moves to ease the foreign exchange market.
This can be explained that SBV believes that this tension of the forex market will quickly ease. The waves of US dollar price increases in July were blamed on intense psychological factors of the foreign exchange market. This is also a main cause on raising the holding of US dollars by both people and businesses.
Thang Long Securities JSC said that “The appreciation of US dollars against dong is driven by the rising demand for foreign currency loans, rather than lack of the greenback in the economy.”
So far this year, the State Bank has built up about $ 2 billion for national forex reserves.
Nguyen Tan Thang, chief economist of the HSC said the main cause of US dollar that has continued appreciating sharply is due to the increase in a number of foreign currency loans falling maturity in the first 6 months. In addition, the US dollar has appreciated relatively against other major currencies on world markets.
This makes people in the country to psychologically continue to buy more dollars, while banks do not want to sell out.
Currently, the dong is in a pressure of depreciation associated with interbank exchange rates and rates on free markets higher than the ceiling forex rates prescribed by the central bank (August 10, these figure were in turn 0.76 percent and 0.73 percent respectively.) Before that, this psychology was reflected by holding dollars in many people, speculators and companies engaged in imports and exports. Now, there is another concern that some banks have begun to hold dollars and restrict to sell out.
According to this specialist, banks are continuing to accumulate US dollars, provided that they forecasted the dollar demand as well as foreign currency exchange rates will increase on by the end of this year.
SBV’s latest move to stabilise markets is requiring banks to close silver floors. This action was seen to prevent speculation to destabilise the foreign exchange market. Because the case is like the gold floors last year, according to SBV, speculative activities have taken place on the silver floors and the variation of silver floors is believed to have affected short-term trends on the forex market. And while no regulations on managing the operations of the silver floors, State Bank of Vietnam has proposed to close the active silver floors and proposed the Ministry of Industry and Commerce to promulgate regulations relating to the trading of this commodity, including of transactions that have collateral goods.
Besides, the government is considering cutting down imports of some commodities like steel and some consumer goods. According to HSC, this would reduce imports and mitigate pressures on the foreign exchange market. One way to do this is to apply automatic import licenses for the above commodities.
Reportedly, the free markets have not seen big changes of dollars over the past two days. This morning August 16, on the Hanoi market, one US dollar is traded at 19,260 – 19.280 dong/USD (bought and sold). The demand for dollars has cooled down on the free markets.
Meanwhile, on the official market, the dong/US dollar exchange rate be maintained at 19,098 – 19.100 dong. – Laodong
August 16,2010
After disclosing the information about a payment account surplus of $ 3.4 billion in the first 6 months of this year, the State Bank of Vietnam, the country’s central bank has not made any more new moves to ease the foreign exchange market.
This can be explained that SBV believes that this tension of the forex market will quickly ease. The waves of US dollar price increases in July were blamed on intense psychological factors of the foreign exchange market. This is also a main cause on raising the holding of US dollars by both people and businesses.
Thang Long Securities JSC said that “The appreciation of US dollars against dong is driven by the rising demand for foreign currency loans, rather than lack of the greenback in the economy.”
So far this year, the State Bank has built up about $ 2 billion for national forex reserves.
Nguyen Tan Thang, chief economist of the HSC said the main cause of US dollar that has continued appreciating sharply is due to the increase in a number of foreign currency loans falling maturity in the first 6 months. In addition, the US dollar has appreciated relatively against other major currencies on world markets.
This makes people in the country to psychologically continue to buy more dollars, while banks do not want to sell out.
Currently, the dong is in a pressure of depreciation associated with interbank exchange rates and rates on free markets higher than the ceiling forex rates prescribed by the central bank (August 10, these figure were in turn 0.76 percent and 0.73 percent respectively.) Before that, this psychology was reflected by holding dollars in many people, speculators and companies engaged in imports and exports. Now, there is another concern that some banks have begun to hold dollars and restrict to sell out.
According to this specialist, banks are continuing to accumulate US dollars, provided that they forecasted the dollar demand as well as foreign currency exchange rates will increase on by the end of this year.
SBV’s latest move to stabilise markets is requiring banks to close silver floors. This action was seen to prevent speculation to destabilise the foreign exchange market. Because the case is like the gold floors last year, according to SBV, speculative activities have taken place on the silver floors and the variation of silver floors is believed to have affected short-term trends on the forex market. And while no regulations on managing the operations of the silver floors, State Bank of Vietnam has proposed to close the active silver floors and proposed the Ministry of Industry and Commerce to promulgate regulations relating to the trading of this commodity, including of transactions that have collateral goods.
Besides, the government is considering cutting down imports of some commodities like steel and some consumer goods. According to HSC, this would reduce imports and mitigate pressures on the foreign exchange market. One way to do this is to apply automatic import licenses for the above commodities.
Reportedly, the free markets have not seen big changes of dollars over the past two days. This morning August 16, on the Hanoi market, one US dollar is traded at 19,260 – 19.280 dong/USD (bought and sold). The demand for dollars has cooled down on the free markets.
Meanwhile, on the official market, the dong/US dollar exchange rate be maintained at 19,098 – 19.100 dong. – Laodong