VietNamNet Bridge – The State Bank of Vietnam (SBV) has sold dollars to commercial banks in an effort to stabilize the dong/dollar exchange rate amid the year-end dollar demand increase.

The dollar sale has been confirmed by a high ranking official of the bank.

The official declined to reveal the amount of dollars sold, but said SBV only sold dollars to commercial banks which reported a negative foreign currency position.

The banks with positive foreign currency position were not eligible for buying dollars from the central bank.

Thoi bao Kinh Te Sai Gon has quoted the deputy general director of a HCM City-based bank as saying that the sale started in early December, estimating that about $1.5 billion has been sold so far.

The banker confirmed that the central bank sold dollars at VDN21,400 per dollar, or VND60 per dollar lower than the ceiling price.

The ceiling price is understood as the highest possible price level at which commercial banks can sell to clients.

The deputy director of a commercial bank well known for funding import/export deals also confirmed he received the registration form for purchasing foreign currencies provided by the central bank in early December.

The bank has bought “a small amount” of dollars to improve its foreign currency position, preparing to satisfy businesses’ increasing dollar demand at the end of the year.

On November 27, Nguyen Thi Hong, governor of the State Bank of Vietnam, at a meeting with the local press, said the central bank had revealed the plan to sell foreign currencies.

“We are considering demand from commercial banks to determine how much we will sell to stabilize the market,” Hong said at the meeting.

Some economists, anticipating low purchasing power, predicted that the imports of consumers goods in the last months of the year would be modest, which means that businesses would not need to buy dollars in large quantities to make payments for imports.

However, Thoi bao Kinh te Sai Gon has quoted bankers as saying that the dollar demand has been increasing since late October, and that many businesses have registered to buy dollars to import products for the year-end and Tet sale seasons.

There are some other factors which have pushed the dollar price up, according to the bankers. Some portfolio investors have tried to buy dollars as part of their plan to withdraw from the stock market. Also, as global oil prices have fallen, Vietnamese enterprises are increasing imports, thus pushing dollar prices up.

Kim Chi