The VND/USD exchange rate has picked up in the past few days. Sometimes, commercial banks quoted their ceiling rates on the VND/USD exchange.
The Governor of the State Bank of Vietnam (SBV) has also left open the possibility of raising the exchange rate later this year. The timing and band of changes remain unknown.
Hovering at ceiling prices
On June 10, banks continued to increase the US dollar price. Specifically, Vietcombank quoted the green back at VND21,195-21,245 (buy/sell); Vietinbank at VND21,180-21,245; Sacombank at VND21,165-21,245. The additional value is VND10-40 per each dollar sold.
On the free market, the dollar price did not pick up in recent days because it was already pegged at the high rate. On June 10, some places quoted the VND/USD exchange rate at VND21,255-21,265 (buy) and VND21,275-21,285 (sell). Meanwhile, the average interbank rate announced by the central bank remained unchanged at VND21,036. The upper limit price at commercial banks was VND21,246, unchanged from the previous day.
SBV Governor Nguyen Van Binh said the dollar price picked up in recent days, with sometime verging on the ceiling price set by the SBV. He attributed the fluctuations to psychological factors and market expectations of an exchange rate adjustment by the central bank. “We have also learned that the SBV will hold the policy rate steady this year and the adjustment, if any, will be within the trading band of 2 per cent. In the past six months, the SBV has not made any adjustments to the exchange rate and it will continue to be kept stable. Therefore, it is expected the exchange rate will be changed,” Binh noted.
Citing market supply and demands and macroeconomic performances, the governor affirmed that the supply and demand of foreign currency had been secured while the balance of payments had run a surplus of over US$10 billion. The central bank has also purchased US$10 billion in the first half of this year. Therefore, there are no grounds for exchange rate adjustment.
Keep it stable or let it rise?
Nguyen Huu Thang, President of Hanoi Trade Corporation (Hapro), said the current exchange rate policy of the central bank is reasonable. Exchange rate stability is good for the economy. However, in the short term, to boost exports, the SBV should consider raising the rate. “The SBV’s intention to cap the exchange rate limit at 2 per cent from now till the end of the year is appropriate. This adjustment will be made gradual and reasonable based on macroeconomic balances. This will support exports on the one hand and cause no effect on the overall economy,” he analysed.
According to the SBV, the possibility of the exchange rate change is left open. Governor Binh said objective conditions and requirements or the change are not available. However, to boost exports and prevent the dong from over-appreciating, the SBV may consider a measured adjustment of the exchange rate. “Based on macroeconomic analysis and SBV management capability, we vow to keep the forex market stable toward the end of this year. And, the SBV will adjust the exchange rate within the band of per cent if necessary,” said the governor.
Thus, the exchange rate adjustment plan is still left open and the greenback may be appreciated. According to experts, the time of change will be based on economic conditions.
Ngoc Ha
Vietnamese
