The foreign exchange rate between Vietnamese dong and the US dollar rose to its highest level since June 30 yesterday. — Photo Vietbao

HA NOI (Biz Hub) — The foreign exchange rate between Vietnamese dong and the US dollar rose to its highest level since June 30 yesterday, hitting VND21,380 to the dollar amid soaring demand from enterprises near the end of the year.

Sacombank sold US dollars at the highest price while other commercial banks like Eximbank, Asia Commercial Bank (ACB), Viet Nam International Bank (VIB) and Bank for Investment and Development of Viet Nam (BIDV) also had high rates, ranging from VND21,290-21,320 for the bid rate and VND21,370-21,375 for the ask rate. The selling price at Vietcombank was the lowest at VND21,360 to the dollar.

The rate has risen since November 7 and gained VND45-50 in just 10 days. The buy/sell rate on the black market has also climbed to VND21,400-21,430.

Market insiders attributed the rise to increasing lending. Credit growth in the banking system expanded 8.63 per cent as of the end of October, of which foreign currency lending made up a significant proportion with an impressive increase of over 20 per cent. Lending is expected to continue expanding in the last two months of the year due to high demand for raw materials and goods ahead of Tet.

VIB deputy general director Le Quang Trung told Dau Tu (Investment) newspaper that foreign currency lending had been growing due to stable forex policy and the large interest arbitrage between dong and the dollar.

Governor of the State Bank of Viet Nam (SBV) Nguyen Van Binh promised early this year that the exchange rate between the two currencies would not increase more than 2 per cent in 2014.

According to analysts, most banks had abundant capital available for lending and the pressure of completing profit targets was forcing them to expand lending, particularly in foreign currency.

Economist Le Xuan Nghia said strong growth of foreign currency loans was a good sign, indicating the expansion of import-export activities.

Responding to worries about the rising forex rate, representative of the central bank said supply and demand for foreign currency was balanced and under control of the central bank. — VNS