VND strengthens against dollar

VND strengthens against dollar

Commercial banks yesterday unexpectedly lowered the US dollar/ Vietnamese dongexchange rate by up to VND50-80 against the previous day.

Vietcombank and Bank for Investment and Development of Viet Nam (BIDV) cut the rate by VND50 and VND70, listing buying and selling rates at VND20,890/ 20,960 and VND20,880/20,960, respectively. The Eximbank rate was even lower, at VND20.880/20.950, down VND80 against the previous day.

Meanwhile, the average inter-bank rate of exchange yesterday, as listed by the State Bank of Viet Nam, remained at VND20,828 per US dollar, a level it had maintained for almost all of a six-consecutive-month period since November last year. The ceiling exchange rate applied to commercial banks allowed by the SBV was VND21,036.

The move was different from that in the past week when the market saw a devaluation that peaked around VND21,000 per dollar last Tuesday. Experts attributed the event to domestic importers demanding dollar to buy products in offsetting petrol source reduction brought about by the temporary closure of the Dung Quat oil refinery.

In addition, they said, credit institutions were buying US dollar to balance over-sale and to deal with the mature debts. They claimed such adjustments were only temporary and that revaluation of the dong against the dollar yesterday proved their anticipation.

SBV representatives said the devaluation of dong vs dollar over the past week was not a concern as foreign exchange supply remained abundant and the country's balance of payments in the first quarter this year saw a surplus of US$5 billion, the highest level for the past decade.

Demand for US dollar will continue to rise after SBV Governor Nguyen Van Binh affirmed it would keep interest rates at 9 per cent until the end of the year at least

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