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Dollar price rises before Tet   2010-02-13 - VietNamNet/VIR

The dollar price on the black market unexpectedly increased sharply on February 11, just two days before Tet. This has been blamed on the interbank exchange rate adjustment made by the State Bank of Vietnam that morning.

 

 
Ha Trung street in Hanoi, which is considered a free market for foreign currency was so crowded on February 11 that there was a danger the parked motorbikes outside would further spill onto the streets and cause traffic jams.

 

Most of clients came to purchase dollar.

 

The dollar price set by gold shops was very high at 19,600 dong per dollar, while it was 19,300-19,350 dong per dollar yesterday. Bigger shops set higher price at 19,700 dong per dollar.

 

However, strangely thing was that the dollar price at which gold shops purchased from clients remained unchanged at 19,300 dong per dollar.

 

A client told the gold shop owner that he needed 15,000 dollar and asked for some discount. However, the owner refused to give discount even with such a big sum of money, saying that the dollar supply was short today.

 

In fact, gold shops were crowded, but only few transactions were made. Only those, who really needed dollar for paying debts or for traveling, purchased dollars today. Meanwhile, people were not buying dollars just to hoard.

 

In HCM City, according to VnExpress newspaper, the dollar price quoted by gold shops in Ben Thanh Market area, exceeded the 19,600 dong per dollar threshold this early afternoon.

 

There were very few dollar transactions. Most clients were surprised when they were told the high prices. A gold shop owner in Ben Thanh Market area told a client: “The dollar price has just moved up. You should buy dollars right now, or the price will go up further this afternoon”.

 

However, gold shop owners themselves dared not purchase dollar from clients at high prices.

 

Trung, the owner of a gold shop in Binh Thanh District, said that many individuals offered to sell dollars at 19,600-19,700 dong per dollar, reasoning the higher interbank exchange rate. However, since gold shop owners are not sure about the exchange rate tendency, they do not dare to take dollars at high prices

 

The dollar price offered by commercial banks has increased more sharply than the free market. Vietcombank, the biggest foreign currency trading bank in Vietnam, yesterday quoted the price at 18,469-18,479 dong per dollar. Meanwhile, on the morning of February 11, it quoted prices at 18,495-18,880 dong per dollar (purchase and sale). At 11 am of the same day, the rates were raised to 18,595-19,000 dong per dollar. The dong/dollar exchange rate quoted by the state owned Bank for Investment and Development of Vietnam was 18,650-19,050 dong per dollar.

 

The State Bank of Vietnam this morning raised interbank exchange rates by 3.4 percent. It has also released the decision to set a cap on the interest rate of businesses’ deposits at one percent.

 

The decision by the central bank was really a surprise to both commercial banks and businesses. Sources said the move was approved by the Government late yesterday afternoon before it was announced at 9 pm.

 

Governor of the State Bank of Vietnam Nguyen Van Giau said that the bank decided to make the adjustment on a pre-Tet day when it saw favorable market conditions. The dollar supply has become more profuse after big conglomerates sold dollars to banks, while overseas remittance is also satisfactory.

 

Giau said that the decision on foreign currency trading band and interbank exchange ratse made in late November 2009 has brought good effects, but Vietnam still needs more remedies to control trade deficit and stimulate export.



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