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Foreign currency market’s general rules’ to set standards for market   2009-07-27 - VietNamNet/TBKTVN

The ‘foreign currency market’s general rules’ are expected to be promulgated by the end of this month, establishing an important defence mechanism for the market to help members manage risks effectively.


The general rules are expected to be completed by the end of July before being submitted to the State Bank of Vietnam for approval. These are agreements member banks must commit to follow before being allowed to participate in the market.


Nguyen Quang Huy, Director of the Foreign Currency Management Department under the State Bank of Vietnam, stressed that the enactment of the ‘foreign currency market’s general rules’ proves to be very necessary for Vietnam’s foreign currency market.


He said that the risks in foreign currency trading are very big and difficult to control. Therefore, the general rules will serve as a necessary defence mechanism to help commercial banks manage risks in the most effective way and help them improve their risk management systems in foreign currency trade.


The general rules will also be a foundation for the foreign currency trade to be applied by all market members. Foreign currency transactions will be carried out in a more rapid and effective way, as well as minimise costs for involved parties.


Huy said that in order to see the general rules strictly followed by the market’s members, commercial banks need to make commitments to apply the provisions of the general rules within their banks and in transactions with other banks.


Commercial banks, on one hand, agreed that it is necessary to set up general rules for foreign currency trading at this moment, on the other hand, said that the draft document still needs a lot of adjustments.


Truong Dinh Song from the Vietnam Banking Association (VNBA) said that morality standards in foreign currency trade should be underlined in the general rules.


Agreeing with Song, a representative from Asia Commercial Bank (ACB) said that the draft morality standards in foreign currency trade remain relatively low and that it is necessary to have more detailed regulations to heighten the morality standards for the market.


Tran Khanh from Hanoi Branch of Dai A Bank said that although Vietnam’s foreign currency trade market consists of two parts, the interbank market and the bank-to-client market, the draft general rules only focus on interbank transactions, and do not cover rules for transactions between banks and clients.


Military Bank’s representative believes that the general rules will get the agreement of banks, but he is not sure about finance companies as the companies still cannot follow general market practice.


Nguyen Doan Duy Ai, Deputy General Director of HCM City Housing Development Bank (HD Bank), noted that gold trade is not mentioned in the draft general rules, while gold, in accordance with the Foreign Currency Management Ordinance, is also considered a kind of ‘foreign currency’.

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