The dollar price on May 6 hit the ceiling of VND21,673 per dollar, the highest ever level. The State Bank once again attributes this to people’s anxiety. Experts believe the dong 2 percent devaluation plan in 2015 is not feasible.

The dollar price began rising earlier this week and continued over the following days. Dong A Bank, Techcombank, SCB and ACB all quoted the dollar price at VND21,673 on May 6 morning. Only Vietcombank and VietinBank, the two big state-owned banks, quoted the VND21,670 per dollar price.

On the HCM City black market, one dollar was sold for VND21,690 on the same day.

Meanwhile, a local newspaper reported that the dollar price soared to VND21,730 per dollar in HCM City at 5 pm.

Some days ago, the State Bank and experts calmed the public down by saying that the dollar supply remains abundant. However, businesses and people are doubtful about the statement.

HSBC, in its latest report about Vietnam’s economy, showed that the dong has been appreciating not only against the Euro and Yen, but also against the currencies of countries which are Vietnam’s export rivals.

HSBC researchers pointed out that the dong appreciation has led to fewer orders from European, Japanese and ASEAN partners, thus badly affecting export companies. 

Meanwhile, the dong appreciation has made imports cheaper, which is believed to make the trade deficit more serious. 

HSBC believes that devaluing the local currency by reducing the interest rates and/or devaluing the dong should be seen as a solution to boost exports in the immediate time.

Meanwhile, government agencies still believe that the dollar price increase because of the people’s groundless anxiety, affirming that there is no factor affecting dollar supply and demand, even though demand doubled during th holiday. 

Regarding supply, an official said the foreign direct investment disbursement in the first four months reached $4.2 billion, while the disbursement for ODA and overseas remittance have been proceeding on the right track.

Nguyen Tri Hieu, a banking expert, also noted that the dollar price increase, the sharpest in the last one month, is “abnormal”.

Hieu said on Voice of Vietnam that the dollar price would keep rising over the following days, and if so, he suggested that the State Bank should devalue the dong by 0.5 percent.

“It would be better to devalue the dong by 0.5 percent. If so, the State Bank still can devalue the local currency by another 0.5 percent in the upcoming months,” he explained.

The State Bank earlier this year announced it will not devalue the dong by more than 2 percent. However, Can Van Luc from BIDV noted that it would be difficult to do.

In the latest news, the State Bank of Vietnam raised the inter-bank average exchange rate between the VND and USD by 1 percent early on May 7, from 21,458VND to 21,673VND per one USD.

CV