The State Bank of Vietnam (SBV) has signalled to start buying the US dollar again after ceasing the purchase for more than two months.

The SBV on December 15 announced the US dollar buying price at VND23,450 per dollar after not listing the buying price of the greenback since early September.

Besides, the SBV on December 16 also sharply reduced the selling price of the dollar from VND24,830 to VND24,780, a much stronger decrease than previous adjustments. In November, the SBV reduced the selling price of the dollar four times, but the decline was only VND10 each time.

Previously, due to the strengthening of the greenback in the world, the pressure on the domestic exchange rate was so great that the SBV had to sell foreign currency since the beginning of the year and continuously increased the selling price of the dollar to a record high of VND24,870. The country’s foreign exchange reserves also fell by $22 billion to about $87 billion, the equivalent of 12 weeks of import, according to ACB Securities (ACBS).

Commercial banks said that the SBV would apply the plan to buy foreign currency for intervention from December 15, applicable to credit institutions with positive foreign currency status that wish to sell foreign currency to the SBV. The maximum amount of foreign currency purchased from each credit institution each time is equivalent to the level to bring the foreign currency status of that credit institution to equilibrium. The form of buying foreign currency for intervention is spot delivery.

Experts said that the SBV’s buy-in move for foreign exchange intervention showed that the liquidity in the foreign currency market had eased.

Previously, due to the pressure of the exchange rate, the SBV had continuously sold foreign currency to the market to intervene. Foreign currency liquidity becomes less tense due to some reasons. Specifically, the psychology of hoarding US dollars might have been relieved, thanks to the high deposit interest rates. Meanwhile, the US dollar price is also at a high level, prompting many US-dollar holders to sell dollars to commercial banks to switch to deposits in dong to earn more profits.

Besides, the source of foreign currency at the end of the year is also more abundant thanks to exports, remittances, disbursement of FDI, surplus trade balance, or cash flow from newly-disbursed foreign currency loans, helping some banks to see excess foreign currency liquidity.

The SBV on December 20 set the daily reference exchange rate for the dollar at VND23,643 per dollar, down VND2 from the previous day.

With the current trading band of +/-5 per cent, the ceiling rate applicable to commercial banks during the day is VND24,825 per dollar and the floor rate VND22,460 per dollar. — VNS