Foreign currency market eases following central bank’s intervention
The US dollar on Wednesday depreciated against the Vietnamese dong after the State Bank of Viet Nam (SBV) sold the greenback on the cheap to stabilise the local foreign exchange market.
On Tuesday, the SBV’s Operation Centre adjusted its dollar rate sold to commercial banks down by VND258 to VND23,650 per dollar amid the rapid rise in exchange rates while keeping the buying rate unchanged at VND23,175.
The SBV’s selling rate was some VND100 lower than that listed at commercial banks and some VND250 lower compared with the rate quoted on the unofficial market.
Following the central bank’s move, the dollar listed at most commercial banks dropped remarkably on Wednesday.
Vietcombank listed the buying rate at VND23,460 per dollar and the selling rate at VND23,650, both down VND100 from Tuesday.
BIDV also cut the buying rate by VND100, listing at VND23,490 per dollar, and reduced the selling rate by VND10 to VND23,650.
Meanwhile, Techcombank cut VND65 from its buying rate, listing at VND23,500, and VND60 from its selling rate to VND23,660.
On the unofficial market, the dollar on Wednesday also cooled down to VND23,700 for buying and VND23,850 for selling, down VND50 against Tuesday.
Pham Thanh Ha, head of the SBV's Monetary Policy Department, on Tuesday said the central bank was willing to sell the US dollar in large volumes at a price cheaper than the market to stabilise the local foreign currency market, which has been recently hit by a rise in the global market and impacts of the COVID-19 outbreak.
According to Ha, the SBV continued to buy the dollar to increase the country’s foreign reserves in January thanks to favourable conditions in the global and domestic markets.
The dollar has risen significantly in the domestic market recently, Ha said, explaining the increase was due to market sentiment in the wake of the pandemic and the depreciation of currencies in many of Viet Nam’s major trade markets.
Despite the rise, the greenback's liquidity in the domestic market had been basically stable and customers’ legitimate foreign currency demands had been promptly met, Ha said.
The country’s dollar supply has remained stable with trade surpluses of US$1.82 billion in the first two months of 2020 and $880 million in the first two weeks of March.
With a net purchase of $20 billion in 2019, the central bank increased the nation’s foreign reserves to nearly $80 billion last year, six times higher than in 2011.
Experts believed that ample foreign currency reserves would help the SBV regulate the exchange rate and take measures to stabilise the forex market if necessary this year.
Ha said the central bank would continue to closely watch the foreign currency market to make suitable adjustments when necessary.