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Banker told people not to worry too much about exchange rate   2010-07-20 - VietNamNet, Thoi bao Kinh te Vietnam

The dollar price had been on the decline, but now has unexpectedly bounced back. Banks have reassured the public that the dollar price will not rise too sharply and that the dong/dollar exchange rate is not a serious concern.

Though the black market’s dollar price moved toward the 19,200 dong threshold, the State Bank of Vietnam (SBV) declared a stable interbank exchange rate of 19,090-19,095 dong per dollar yesterday.


SBV has remained calm regarding the dollar price increase on the black market. They released positive information on dollar supply and demand and affirmed that the dong/dollar exchange rate is stable since the capital surplus can offset the trade deficit.


Hoang Huy Ha, Deputy General Director of the Bank for Investment and Development of Vietnam (BIDV), also believes that the dong/dollar exchange rate will not climb radically like in 2009, especially as commercial banks have quoted dong/dollar exchange rate at ceiling levels over the last two weeks and the dollar price have been rising steadily over the last 10 days.


Answering a question raised by Thoi bao Kinh te Vietnam journalists, Ha explained that it is necessary to look at overall supply and demand in the national economy to forecast the exchange rate, rather than focusing on price increases or decreases at certain moments.


He added that macroeconomic factors will continue support the foreign currency market and stabilize it in the last half of 2010.


“The profuse capital balance will offset the current balance deficit and help the State Bank increase the national foreign currency reserves,” Ha maintained.


Ha went on to say that, if considering basic factors of the payment balance (trade balance, kieu hoi or overseas remittances, foreign direct investment, foreign portfolio investment, official development assistance and foreign debts, it is estimated that the foreign currency position is still plus three billion dollars.


The foreign currency market in the first half of 2010 was relatively stable and Ha believes this was the result of SBV measures taken to stabilize the market.


Ha also approved of allowing export companies, with earnings in foreign currencies, to borrow capital in foreign currencies.  The SBV decision resulted in outstanding loans in foreign currencies rising by 27.5 percent over the end of 2009, making the dollar supply increase by $3.5 billion.


Circular No. 3 stipulated that the maximum deposit interest rate in foreign currency by a firm is one percent, which also helped. Foreign currency deposits only grew by 3.06 percent over the end of 2009, which demonstrated that businesses would not hoard dollars, but would sell them to banks.


The national economy’s strong recovery also backed the value of the dong.


According to Ha, the debt crisis in Europe affected Vietnam. In late 2009, gold fever made the dong/dollar exchange rate jump to 19,700 dong per dollar. Now, as the domestic gold price is lower than the world’s, businesses are re-exporting gold, thus making the dollar supply expand.


On the morning of July 19, the Hanoi black market saw the dollar price jump to 19,160-19,190 dong, up 30 dong over late last week.


With the new dollar price, the gap between the black market dollar price and the price quoted by commercial banks increased to 100 dong. Despite the increase, the transactions on the black market did not become hectic yesterday.

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