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Dollar falls on free market   2008-12-29 - Thanh Nien

Dollar falls on free market
Dollar prices have dropped on the free market as the high demand on sentiment following the central bank’s move to weaken the dong has gradually reduced.


After the State Bank of Vietnam fixed the dong’s rate 3 percent down against the dollar to spur exports on December 25, the dong was traded for as much as VND17,600 per dollar at moneychangers in Hanoi.

But Sunday, the currency was traded at between VND17,400 and VND17,500, a moneychanger on Hoan Kiem District’s Ha Trung Street said.

There were less customers buying or selling the greenback on the free market, according to moneychangers.

Dung, owner of Dung Tan Gold Shop on Hang Bac Street, said only a few small-time customers visited her shop to exchange currency Sunday afternoon.

An executive from the Bank for Investment and Development of Vietnam (BIDV) said many businesses rushed to buy the dollar just after the central bank weakened the dong as sentiment shifted.

Experts said the jump in dollar prices on the free market on December 25 was driven by sentiment, not real demand.

The free market rates Sunday moved closer to rates at commercial banks where the demand to buy dollars was still strong.

The dong was quoted at VND17,380/17,495 per dollar on Vietcombank’s website Sunday afternoon.

Nguyen Phuoc Thanh, general director of Vietcombank, the country’s third largest lender, said as dong interest rates were now low, many people bought dollars to pay off their dollar-denominated loans early and switched to dong loans later, sending the dollar demand high.

The BIDV executive expected the dollar supply would increase as soon as remittances rose ahead of Tet (Lunar New Year) holidays and export companies sold more dollars when they realized the real demand was less than expected.

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