SBV Issues Circular on Forex Position for Credit Institutions

The Governor of the State Bank of Vietnam (SBV) has issued the Circular No. 07/2012/TT-NHNN on foreign currency position of credit institutions and foreign bank branches (collectively called as credit institutions). This circular governs those credit institutions licensed to engage in forex operations.

 

In regard to the principle to calculate the foreign currency position, the circular stipulates that foreign currency position of credit institutions is determined at the end of working days; the original currency position of foreign currencies is calculated on the basis of the balance of relevant accounts stipulated in Annex attached to this circular; original currency position of each foreign currency is converted into VND according to the position exchange rate; positive foreign currency positions are combined to determine the total positive foreign currency position, and negative foreign currency positions are combined to determine the total negative foreign currency position.

 

The circular also stipulates a number of new items as compared to the previous regulations on the limit of the total foreign currency position as follows: the total foreign currency position limit is calculated by the ratio of the total positive or negative foreign currency position over own capital of credit institutions; the own capital to calculate the limit of the total foreign currency position of credit institutions is the own capital of the month preceding the reporting period; the total positive foreign currency position of credit institutions should not exceed 20 percent of the own capital of credit institutions; and the total negative foreign currency position at the end of working day of credit institutions should not exceed 20 percent of the own capital of credit institutions. Foreign bank branches in Vietnam with charter capital of below US$25 million each are allowed to apply the total foreign currency position limit as follows: the total positive foreign currency position converted into USD at the end of working day should not exceed US$5 million; and the total negative foreign currency position converted into USD at the end of working day should not exceed US$5 million.