Banks refuse to buy US dollars from central bank

A senior official of the State Bank of Vietnam (SBV) on July 4 told Thoi Bao Kinh Te Vietnam that commercial banks had not registered to buy dollars at preferential prices from SBV

On July 2, amid fluctuations of the dollar, SBV stated that it would intervene in the market by selling foreign currencies at low prices if necessary – Vietnamnet reports.

On July 3, SBV’s Stock Exchange quoted VND23,050 per dollar, or VND244 per dollar lower than the previous session and VND264 lower than the ceiling price level.

The price of VND23,050 per dollar was also applied on the next day.

However, no commercial bank had registered to buy dollars by the end of July 4.

The SBV official affirmed that the transactions in the market have been going smoothly, the dollar supply in the market is not short as some people think.

Asked about the central bank’s treatment to Vietnam dong, he said SBV has considered necessary measures to balance the supply and demand and avoid the oversupply of the dong in circulation which will put pressure on the dong/dollar exchange rate and inflation.

The greenback has been appreciating sharply in the international market. As the US FED raised the interest rates, other central banks have also raised their interest rates, affecting the exchange rates of the US dollar with local currencies.

The greenback has been appreciating sharply in the international market. As the US FED raised the interest rates, other central banks have also raised their interest rates, affecting the exchange rates of the US dollar with local currencies. 

In such conditions, the dong/dollar exchange rate cannot stand still.

However, analysts warned that any excessive fluctuation of the dong/dollar exchange rate would have negative impact on the macroeconomic balances.

SBV earlier this year stated that stabilizing the exchange rate to stabilize the macro economy will be the goal for the entire year 2018.

The SBV senior official also said the macroeconomic stability is a great advantage Vietnam of over many other countries. The exchange rate stability will help make Vietnam more attractive to foreign investors and bring confidence to businesses.

Asked about measures to deal with the dong oversupply to avoid pressure on the exchange rate and inflation, the official said SBV will continue strictly controlling the credit growth.

It is expected that with strict control, the outstanding loans in 2018 may grow more slowly than initially planned. The credit growth rate in the first half of 2018 also slowed down compared with the same period last year.

The rumour about foreign investors withdrawing capital from Vietnam spread following the investors’ continued net sale recently. On July 3, the net sale was VND300 billion.