The SBV plans to raise the exchange rate by 2-3 per cent this year.—Photo tinnhanhchungkhoan

It said that market speculation was the main reason for the recent fluctuations in the forex rate.

To stabilise the rate, HSC said the SBV was applying administrative measures to control both the inter-bank and free forex markets, and the SBV would also pump more US dollar into the market.

Economist Dr Nguyen Tri Hieu said the recent increase in the price of the dollar price was due to psychological factor which occurred after the SBV decided to raise the inter-bank average VND/US$ exchange rate by 1 per cent to VND21.036 on June 27.

The SBV plans to raise the exchange rate by 2-3 per cent this year.

Dollar down in free market

The SBV set the exchange rate for the US dollar at VND21,036 on Wednesday, which can move in a band of plus or minus one per cent.

Today, Vietinbank raised dollar prices by VND5/dollar for bid, while commercial banks were offering buying prices from VND21,220-21,235/dollar and selling at a ceiling of VND21,246/dollar as of 09:15 am, according to StoxPlus.com.

The selling and buying prices for the dollar in Ha Noi's free market fell to VND21,680 and VND21,650, falling between VND70-80 per dollar compared with yesterday.

Member of National Monetary Policy Consulting Council Le Xuan Nghia said the price had fallen because banks had stopped buying foreign currency to settle forex positions.

Nghia said when the dong's interest rate was high, many banks sold off their dollars for dong. "Now the difference between the dong and the dollar is decreasing, so banks have been forced to revert to the greenback."

According to VnExpress, a member of the National Monetary Policy Consulting Council who wanted to remain anonymous said it was estimated that banks previously lacked around $1-1.2 billion, but that had fallen to $200 million.

The SBV's decision to increase the forex rate has made many experts fear speculation from banks. — VNS