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||15 November 2009
Vietnam: Strong dollar keeps importers worried
A shortage of US dollars is giving importers anxiety and causing the greenback to strenghten on the domestic forex market, VietNamNet Bridge reported.
Some enterprises in need of US dollar for overseas payments in the final quarter of the year claim they are unable to buy the currency at banks.
The State Bank on Friday set the interbank rate at 17,021 dong to the dollar. With banks allowed to trade only within plus-or-minus 5 per cent of the official rate, banks were forbidden to charge buyers more than 17,872 dong.
Commercial banks have been tending to keep these rates at the upper limit of the daily trading band, as the US dollar has been appreciating on the black market. On Friday, major banks like Vietcombank, the Bank for Investment and Development of Viet Nam (BIDV), Asia Commercial Bank and Eximbank were listing buy and sell prices the same, at about 17,872 per dollar dong.
"We need $200,000 to import new food processing equipment from Germany," said Mai Huy Tan, general director of Duc Viet Food Co. "Based on the official exchange rate, the equipment costs 3.6 billion dong. But we have to pay 4 billion dong for the dollars."
Computer and IT devices importer Nguyen Ba Anh said, "Sometimes banks suggest that we find dollars on the black market. They say, ‘We don’t have dollars’.’ But one dollar on the street costs 18,800 dong."
Banks have also been requiring customers to buy dollar via options, futures or forward contracts, effectively requiring them to buy dollars at higher future prices and circumventing the daily trading band.
Some importers complained that how much importers lost on foreign exchange depended on how well they negotiated "additional fees" with banks. They often paid additional 600 dong extra per dollar in such fees.
"Importers always pay the extra toll," said Tan.
Vietcombank general director Nguyen Phuoc Thanh denied such practices.
"We don’t do that," Thanh said. "Our bank forbids such trading. In fact, we don’t have the dollars to sell as no one sells dollars to us. The higher prices on the black market have directed dollars there."
Some other banks also complained that exporters were not selling dollars to banks, holding on to the currency to import raw materials. While some were urging the State Bank to intervene, a number of economists have countered that such interference just distorted the market.
Vietnam Banks Association general secretary Duong Thu Huong said, "Normally, exporters used to sell dollars to the bank to get dong to meet production demands. But now, they have been subsidised in borrowing Vietnamese dong from banks, so they don’t need to sell the dollar any more."
Huong projected that banks would be able to ensure a sufficient dollar supply through the end of the year.
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