VietNamNet Bridge - Many unusual things are now occurring in the finance market, worrying investors.

 

The State Bank of Vietnam on May 7 finally decided to raise the inter-bank average exchange rate between the VND and USD by 1 percent, from VND21,458 to VND21,673 per dollar, while the dollar price soared in both bank-to-business and black markets.

The stock market has unexpectedly cooled, with the VN Index dropping sharply by 17 points earlier last week when the market opened again after the long holiday. Analysts noted the downward tendency is continuing, worrying investors.

Dollar and gold go opposite ways

The dollar price was rising late last week, though dollar demand and supply remained stable, and foreign exchange reserves are more than sufficient, while the gap between the world and domestic gold prices narrowed.

The dollar buy price in the black market was reported at VND21,650-21,660 per dollar on the morning of May 6, while the sell price was VND21,675-21,685. Meanwhile, Eximbank bought at VND21,610 per dollar and sold at VND21,673, the ceiling level at that moment.

The State Bank has finally decided to raise the interbank dong/dollar exchange rate by one percent on May 7, though it repeatedly said it needs to think carefully before devaluing the local currency now.

The 2 percent dong devaluation this year, in the eyes of some analysts, may upset the exchange rate policy. Governor of the State Bank Nguyen Van Binh earlier this year stated that the dong would be devalued by no more than 2 percent in 2015. And the “quota” of 2 percent has been “used up” just in the first five months of the year. 

While the world’s gold price has once again hit the $1,200 per ounce threshold, the domestic price is VND35 million per tael. It appears that the domestic gold price is unaffected by the international price, and that it has no relation to the dollar price hike.

Stock market shock

The first trading session after the public holiday on May 4 caused shocks to investors. The HCM City bourse lost 17 points on the day, a record decrease over the last year.

Both the Hanoi and HCM City stock trading floors lit with red on the afternoon of May 4 with the share prices dropping dramatically. The VN Index lost 17.32 points within one trading session, which was believed the biggest fall in one year.

An analyst commented that it was very difficult for investors to decide how to make investments with their money, because all the gold, dollar and real estate markets are stagnant. Meanwhile, banks all have slashed their deposit interest rates due to an oversupply of capital.

ANTD