ASEAN KEY DESTINATIONS
State firms told to sell dollars
The circular regulates that eligible enterprises should sell their dollars from fixed-term and non-term deposit accounts, and other sources of foreign income from July 1. They will then be able to buy dollars from commercial banks to feed legitimate needs.
"The circular is good news," Le Duc Tho, Vietinbank's Deputy General Director, told Viet Nam News in a telephone interview yesterday. "The decision, together with other measures, aims to absorb excess liquidity, restrict accumulation and bolster dwindling foreign reserves," he said. Foreign reserves have slid from a level of nearly US$24 billion at the end of 2008 to only about $12 billion, some foreign financial institutions have estimated.
"Enterprises should focus on their core businesses and not accumulate and trade money as they used to," Tho said.
The order comes at a time when the commercial banking system has plenty of dollars in hand and has been lowering deposit interest rates.
"The main problem is how banks will buy dollar reserves when we don't have sufficient Vietnamese dong to exchange," an executive board member of a Hanoi-based State-owned bank said.
Moreover, the overloaded dollar supply would continue to weaken the dollar, encouraging enterprises to import more, especially with manufacturing costs in the domestic market increasing, she said.
By the end of March, 78 economic groups, corporations and enterprises held more than US$1.6 billion on deposit, including $376 million in fixed-term deposits, according to the State Bank of Viet Nam Governor Nguyen Van Giau.
Meanwhile Viet Nam's trade deficit in May is estimated at about $1.7 billion, the highest since January 2010, taking the deficit so far this year to $6.59 billion.
"The total dollar reserves that enterprises hold are only enough to meet one month of imports," the female bank manager said. "The circular doesn't make sense."
The SBV had previously ordered major groups and corporations to sell dollars back to commercial banks to ease a shortage of dollar supply, a situation that increased tension on both official and black forex markets.
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