3:05:45 PM | 22/9/2008
The State Bank of Vietnam started purchasing foreign currency and Sept 17 depreciated the dong by 0.03 per cent against last Friday, bringing the US dollar exchange rate to VND514.
The moves, made in the context of a local supply of US dollars, were designed to stabilize the foreign exchange market (FX), State Bank Governor Nguyen Van Giau.
The value of the dong has fallen by 19 per cent-20 per cent against the US dollar since early Sept. At commercial banks last week, US dollar were going for VND600, while on the black market, US dollar gained only a little more at around VND620.
With the daily trading band currently at minus/plus 2 per cent, banks can quote dollars at a maximum of VND844 and a minimum of VND183, higher than the previous buy/sell prices of VND560/VND610.
The central bank’s move to depreciate the dong via the interbank market was greatly appreciated by the export community.
Boosting export is considered tremendously important for development, a stimulus for production and the creation of more jobs.
Moreover, if the central bank did not intervene to stabilize exchange rates, the cheaper foreign currencies could have led to an even larger trade deficit.
“It’s a good move by the central bank, which shows that SBV is managing exchange rates more flexibly to catch up with the real situation,” Cao Sy Kiem, former governor of the State Bank and chairman of the Association for Small and Medium Sized Enterprises, said.
Kiem noted that the current abundance of foreign currency was only temporary.
Purchasing foreign currency and raising interbank exchange rates have stirred some concerns about a higher inflation rate, as more dong may be pumped into circulation. (VNA)
Vietnamese
