Is Vietnamese Money Devaluing?

At Bao Tin-Minh Chau Jewellery Company, the buying price of a USD was VND16,000 and the selling price was VND17,000. However, this company still sold US dollars like hot cakes. On May 9, the firm trebled its USD sales to some US$900,000. By the end of the day, the exchange rate dropped to VND16,200/USD but many firms refused to buy. It seemed that the “USD fever” had passed.

 

According to the State Bank of Vietnam, the abundant foreign currency supply can meet all payment demand of the economy at anytime. Mr. Truong Van Phuoc, Director of the Foreign Exchange Department under the State Bank, said: The official US exchange rate increased only 0.6 per cent since the beginning of this year. After a long period of time standing above VND15,000 for a USD, the rate gradually increased to VND15,995 for a USD. So, it is not unusual for the rate to reach VND16,000-16,005 for a USD, he said.

 

According to economists, the USD value increase in recent days was attributed to people’s fears, which happened to gold prices several weeks ago. Many took this advantage to falsify market information to cause a market panic to gain profits. A rumour that the USD depreciation against VND will be 1.5-2 per cent this year, prompting USD traders to speculate this hard currency leading to a fake USD scarcity on the free market.

 

To curb this issue, on May 10, the State Bank intervened in the foreign exchange market by promising to supply USD to commercial banks if they lacked foreign currencies to sell to enterprises. In fact, this action was not actually necessary as the foreign exchange activities at commercial banks were still normal but it was a remedy for the people’s fears. After three days’ USD price rise, transactions at banks were still normal. There is no sign of drawing VND deposits for foreign currency accounts. So, there is no exact answer for the VND value at the moment.