VietNamNet Bridge – The State Bank of Viet Nam denied speculation last week that it was preparing to adjust the exchange rate.

A daily working scene at a branch of Agribank in Ha Noi. The State Bank of Viet Nam denied speculation last week that it was preparing to adjust the exchange rate.

The clarification was made after many banks reported a significant rise in demand for US dollars following the rumour, which pushed up the value of the dollar against the Vietnamese dong.

At Vietcombank, the dollar was listed at VND21,030 on Friday, up VND65 from early last week. The rate at Eximbank and ACB also increased to VND21,020.

Value of the greenback in the unofficial market also accelerated to VND21,330.

SBV deputy governor Le Minh Hung declared that the rumour was baseless, explaining that liquidity on the forex market was very good.

As the dong liquidity of some banks was abundant while their dollar liquidity was restricted, they therefore bought the greenback. The rising demand would therefore occur for a short time, Hung said.

A weekly State Bank of Viet Nam report released last Thursday also stated that many major banks were recently net buyers in foreign currency transactions with their customers and thus had redundant foreign exchange reserves.

"The interest rates for deposits in dollars are still very low compared with those in dong, so exporters have stepped up selling US dollars. Rising inventories and importers hesitating to import goods have also resulted in low demand for this currency," Eximbank general director Truong Van Phuoc told VnExpress.net.

The online news website quoted a Ha Noi-based bank's deputy general director as saying that the low demand had pushed down lending interest rates for dollar loans.

The State Bank also said dollar lending rates had eased and now hovered around 5-8 per cent. State-owned banks set the rates at 4-5 per cent for short-term loans and 6-7.5 per cent for medium and long-term lending. For joint stock banks, the rates are 5.5-6.5 per cent and 6.5-8 per cent respectively.

Some industry insiders said accelerated official development assistance (ODA) disbursements and increasing remittances had helped keep the exchange rates steady.

"Increased spending in April by foreign tourists also kept the rate stable," a bank official said.

Source: VNS