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13 October 2009

Vietnam’s central bank moves to close exchange rate gap

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The State Bank of Vietnam on Saturday quoted the inter-bank foreign exchange rate between the Vietnamese dong and the US dollar at 17,001 dong per dollar, the highest ever, helping the dollar price at banks move closer to the price on the unofficial market, reported

The upward trend of the inter-bank rate has been maintained by the central bank for over a month. Banks now have to trade the dollar in the trading band of 5 percent around the inter-bank rate so when the inter-bank rate is up it will allow banks to increase their buying and selling prices of the dollar.

Lenders have recently faced difficulties in buying the greenback from enterprises due to the official price being lower than the unofficial price.

However, with a higher inter-bank rate, the situation that banks quote buying and selling prices of the US dollar at the same level and at the highest permissible level has been moderated. Sacombank and Viet Asia Commercial Bank have quoted the selling price 10 dong higher than the buying price since Friday while Vietcombank quoted the selling price at 17,849 dong, lower than the highest permissible level of 17,951 dong on Saturday.

ACB and Eximbank quoted the buying and selling prices on the US dollar at the same level and at the upper limit. The different prices are due to different demand on foreign capital by banks.

While the US dollar at banks has strengthened recently, the price on the black market has fallen to around 18,300 dong recently from a high of 18,500 dong three months ago.

Vo Tri Thanh, deputy head of the Central Institute for Economic Management (CIEM), commented that the central bank had adjusted the foreign exchange rate to reflect market demand and partly to support exports. The economy has been running at a big trade deficit while foreign capital inflow is not high this year, one reason for the central bank to adjust the forex rate up gradually, he said. 


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