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| Local dollar rates soar to the ceiling price in most commercial banks in Viet Nam on May 6— Photo magicwave.com.vn |
HA NOI (Biz Hub) — The greenback rates in most of the local commercial banks on May 6 touched the ceiling price of VND21,673 per dollar set by the central bank in January.
The rates in the local market soared to VND70 per dollar, after a long holiday season in Viet Nam from April 28 to May 3.
On May 5, only An Binh Bank and Asia Commercial Bank sold their dollar at the ceiling price, but today, all the local banks sold at the ceiling price, except Vietcombank and VietinBank that set their selling rate at VND21,670.
Rates in flea markets surpassed the ceiling price on the same day. Quoc Trinh Gold and Jewellery Company on Ha Trung Street, as one of the most popular money exchange markets in the capital city, bought the dollar for VND21,660 and sold for VND21,690.
The State Bank of Viet Nam (SBV), as of January 7, had increased the inter-bank exchange rate from VND21,246 to VND21,458 per dollar. With an effective exchange rate with a one-per cent margin, the ceiling rate was VND21,673 per dollar.
Earlier this year, the SBV's representative confirmed to the local media that the supply and demand for foreign currency was stable and that speculation by local investors had led to a rise in rates.
According to the SBV, the foreign currency status is even better in some banks where they have bought more dollars and sold less.
The Ministry of Finance has announced the greenback to Vietnamese dong exchange rate at VND21,458 for May. The rate was the same during March and April.
From early this year, the central bank has repeatedly confirmed that the rates will not be increased for now, and that the bank plans to increase the USD-to-VND exchange rate by no more than two per cent in 2015.
However, banking expert Can Van Luc told financial website ndh.vn that it will be difficult for the SBV to stick to their plan, considering the current development in the local market.
According to the Viet Nam Quarterly Macroeconomy Monitor Report in Q1, 2015 by Viet Nam Institute for Economic and Policy Research (VEPR), though the general surplus is maintained as high as $4 billion in 2015, it is only one third of the surplus value in 2014.
The VEPR believes that the country can allow three to four per cent inflation each year within 2 or 3 years, with a step by step increase of 1-1.5 per cent.
The institute is of the view that the SBV should also consider the greenback's rise over other major currencies in the global market and how it can impact import and export activities in the country.
Last week, agricultural enterprises attending an import and export workshop in Ha Noi complained that the current anchoring of exchange rate brought much trouble to their businesses.
Nguyen Viet Vinh, General Secretary of the Viet Nam Coffee and Cocoa Association, remarked that the anchoring of the rate made a significant impact on coffee exports, especially in the context of Brazil as the largest competitor in coffee exports, and devalued its currency rates.
On May 6, reuters.com reported that the dollar slipped, after staying on the defensive following a disappointing U.S. trade data for March painting an even bleaker picture of the economy in the first quarter. — VNS