Vietnamese traders exchanged the US dollar at VND21,230 on the parallel market yesterday – down VND10 against Monday. — VNS File Photo

HA NOI (Biz Hub)— The greenback yesterday slightly dipped against Monday in the wake of increasing gold prices, marking the highest point for gold in two months.

The local gold price gained 0.1 per cent yesterday to settle at VND35.53 million (US$1,675) per tael (one tael is equivalent to 1.2 ounces).

Since the end of January, local gold has seen an overall upwards trend from VND35 million per tael, but this trend is not yet clear or stable.

Yesterday's increase in local gold was driven by the soaring global gold prices, which hit a three-month high as investors wagered the Fed's interest rates were set to remain near zero for an extended period.

The international gold price rose by 0.7 per cent to $1,283.69 per ounce, whilst the dollar lost a quarter of a cent to the euro at $1.3668.

Stable FX

Yesterday, Vietnamese traders exchanged the US dollar at VND21,230 on the parallel market – down VND10 against Monday.

Despite these slight changes, the Vietnamese dong exchange rate to the US dollar has been stable. Due to the recent stability, foreign currency debts have risen, contributing to a 1 per cent increase year-on-year in January.

The State Bank of Viet Nam affirmed its intent to keep the forex changes within 2 per cent in 2014 and is now committed to a flexible approach to management that maintains currency market stability and increases foreign currency reserves.

SBV Deputy Governor Nguyen Dong Tien, cited by Viet Nam News Agency, said the central bank manages the FX in the line with the National Assembly's targets of 5.8 per cent economic growth and 7 per cent inflation.

While economic experts welcomed such intentions, they also warned that any FX changes must be thoroughly examined to avoid chaos in the market.

SBV Foreign Currency Management Department head Nguyen Quang Huy claimed the bank's most appropriate management mechanism was currently short-term exchange rate adjustments. The bank also needs hedging instruments to limit exchange rate risks, as rare as their use may be.

In the latest Asia monthly report released on Monday, ANZ expected the central bank to maintain its benchmark refinancing rate on a prolonged hold at 7 per cent. — VNS