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NEWS UPDATES 12 December 2009

Vietnam struggles to meet US dollar demand

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Although State Bank of Vietnam pledged to supply US dollars to the banks with the foreign currency status of over negative 5 percent, the gap of US dollar demand and supply remained hard to be filled, reported

According to a bank's vice general director, bank's foreign currency supply to customers recently only met 10-15 percent of real demand. They bought a foreign currency volume from SBV when falling in the negative foreign currency reserve but they will have to select customers carefully before providing US dollar.

General director of Vietcombank, Nguyen Phuoc Thanh said that the US dollar sales to enterprises have increased sharply. He also admitted that the bank has not an abundant US dollar reserve at this time while exporters still are hesitant in selling US dollar to the bank because they are expecting a rise in forex rate.

Meanwhile, the enterprises' demand for foreign currencies to import goods to serve the end of the year market is increasing rapidly.

Right after applying the commitment of stabilising market with seven other banks, Maritime Bank has provided over $500 million to big economic groups namely Petrogas Vietnam, Vietnam Steel Corp, VNPT and Vinacomin. But its supply remained small compared with the highly surging demand.

As stated by Ho Huu Hanh-director of SBV HCM City arm, the city's outstanding loans in foreign currencies now account for 25 percent of the figure of whole banking system because importers are still worried about forex rate risks.

However, bankers said, after the short term subsidisation package of the dong ends, the outstanding loans of US dollar will increase in the next year early. Therefore, banks are racing to push the US dollar deposit rate to new high of 4 percent pa and then boost foreign currency lending for 2010.

Forex rate is expected to stand at high level because of prolonged tense situation of the foreign currency market and movements in gold prices. So SBV launched synchronous measures and supplement supply whereby the forex rate on the free market fell.

By the end of November 2009, the free market's forex rate stayed at around 19,500 dong/US dollar. It needs to take some time to pull down the free forex rate closer to the official market.

Reportedly, total term US dollar deposit balance of seven large groups and corporations till November 30 reached $1.2 billion and the demand deposits are posted at $700 million.



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