SBV sells US$2 billion, but greenback price remains high

Created 21 July 2018
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HCMC – The State Bank of Vietnam (SBV) sold over US$2 billion to local commercial banks this week, in a bid to stabilize the foreign exchange market. However, the price of the greenback has become more firm against the local currency.

An SBV official told the Saigon Times that the central bank has purchased large amounts of foreign currencies in recent years. Therefore, this is the proper time for the central bank to intervene in the forex market, in a bid to raise the nation’s moneqy supply by selling foreign currencies to commercial banks.

US$1 is currently being sold at VND23,050, according to the reference exchange rate at the SBV Operations Center.

A deputy general director at a bank offering loans to import and export companies said his bank had also purchased foreign currencies from the SBV in the past few days.

He added that those banks which have minimal amounts of foreign currencies are allowed to sign up for forex purchases.

He also predicted that the supply of foreign currencies would not fall in the near future. The central bank would continue to have the ability to intervene in the market, as its foreign currency reserves remain high, with some US$63.5 billion as of early this month.

Ngo Dang Khoa, director of Currency Trading and Capital Market at HSBC Vietnam, said basic factors on the international market are difficult to predict in the long run.

Thus, according to Khoa, in order to manage business activities and cash flows, as well as effectively curb risks, enterprises should take preventive measures to minimize risks in exchange and interest rates by improving their understanding of market risks and risk prevention vehicles.

While the central bank is adopting flexible and stable monetary and macroeconomic policies, local banks should meet the demand for foreign currencies among firms, while offering them solutions to reduce market risks.

In a report, VNDirect Securities Corporation said that the increasingly high exchange rate between the U.S. dollar and the Vietnamese dong would have adverse effects on companies that are saddled with huge debts in U.S. dollars, or mainly import goods, such as chemicals, plastics and dairy products.

However, the situation would benefit exporters, especially those in the fields of seafood, textile-garments, rubber, and industrial real estate.

On July 20, the U.S. dollar was traded at VND23,095, the highest rate this month, at the Bank for Foreign Trade of Vietnam (Vietcombank). Meanwhile, the greenback was bought at VND23,290 and sold at a record high of VND23,340 on the informal market.

Compared with late last year, the price of the U.S. dollar rose by some 1.6% at banks, and 2.6% on the informal market.

Source: ThesaigonTimes

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