VND/US$ exchange rates see new hike records

Wednesday, May 14, 2008
The dollar value has been witnessing continued, record increases. Commercial banks opened today’s transactions with new prices for the dollar, VND7/US$1 more than yesterday.
The dollar revaluation began in the first week after the April 30 holiday, when the dollar price unexpectedly soared by VND20/US$ in the first transaction day, kicking off the second sharp increase of the dollar in the year. To date, the dollar price has increased by VND40/US$ over the pre-holiday period.
Currently, banks’ sale price is at VND16,165/US$1, while in the black market, the sale price is VND16,450/US$1. Compared to the deepest low of the dollar (VND15,300/US$1), the price has soared by VND150/US$1.

The latest report by the State Bank of Vietnam said that the dollar supply and demand shows signs of imbalance with demand for the dollar on the rise.

The main reason behind the increased demand for dollars is the higher demand of import companies. As everything is getting more expensive on the world’s market, importers need more dollars to import commodities. The supply of dollars has become tighter as Vietnam had the high trade deficit of $11bil in the first months of the year. The figure has been pressuring the foreign currency reserve of the State Bank, though the bank affirmed that it would sell dollars to commercial banks to ease the dollar shortage.

Dollar deposits have been slowing down. In the first four months of the year, deposits in dollars increased by 1.73%, higher than the VND deposits, but representing a lower rate than the same period of last year (5.39% vs 15.55%).

The Governor of the State Bank of Vietnam has released Document No 4228, requesting commercial banks to provide enough dollars for petroleum importers so that the importers can ensure petroleum supplies to serve domestic consumption.

Commercial banks say that they have the demand to buy foreign currencies from the State Bank. (TBKTVN)