The dong has stabilised again against the US dollar after losing ground for more than two weeks.— Photo radiovietnam

HCM CITY (Biz Hub)— The dong has stabilised again against the US dollar after losing ground for more than two weeks.

At 2:20 yesterday, Vietcombank bought the greenback at VND21,080 and sold it at VND21,150, respectively down from VND21,120 and VND21,200 in late last week.

At BIDV, the dollar buying price was unchanged at VND21,110 but its selling rate was weaker by 10 dong at VND21,170.

Meanwhile, the inter-bank exchange rate remained at VND21,036, the dollar buying price at the State Bank of Viet Nam's transaction offices was at VND21,100 and the selling price at VND21,246.

Analysts attributed the weakening of the dollar to many reasons, one of which was the country's low trade deficit.

The central bank with foreign reserves estimated at around US$30 billion has intervened strongly in the foreign exchange market and is ready to protect the dong, they said.

Since the inter-bank interest rate has increased again since mid-July, banks have chosen to lend on the inter-bank market instead of buying the greenback as they did in the past, they said.

This has eased demand for the dollar on the market, they explained.

The gold market is also stabilising after the central bank held several gold auctions, helping narrow the gap between global prices and domestic gold prices.

According to Vietcombank Securities, foreign direct investment this year has topped $12.63 billion, almost 20 per cent up year-on-year. Investors have already brought in $7.6 billion, adding to the dollar supply, a company representative said.

Financial analyst Can Van Luc told Thoi Bao Kinh Te Viet Nam (Vietnam Economic Times) that though the dollar demand often increases in the latter part of the year, it would not affect the stability of the foreign exchange market.

However it was likely to see some fluctuations due to seasonal factors, he said.

The central bank is also careful in fixing the forex rate in a manner that does not stoke inflation, he said.

He called on the central bank to disseminate forex information to protect people from rumours.

BIDV Securities has forecast the dong to remain stable for the rest of this year.

Inflation, expected to be around 8 per cent this year, would not affect the forex rate much, it said.

The 5-6 per cent difference in dollar and dong deposit rates has dissuaded people from converting the dong into dollars. — VNS