Free-market USD surpasses bank rate

Free-market USD surpasses bank rate

The rise of the greenback in the unofficial market was driven primarily by seasonal factors. The final three months of the year typically see a surge in demand for foreign currency transactions, leading to larger and more frequent price fluctuations.

On the domestic market, the free-market USD rate last week rose by VNĐ150-250 against the previous week. Photo thanhtra.com.vn

The US dollar in the free market has been raised to VNĐ25,900-26,200 per dollar, marking the first time in four months that the informal rate has exceeded the bank rate.

On the free market, the greenback on October 11 were brought at VNĐ25,900, an increase of VNĐ50 from the previous day, and VNĐ250 higher than bank rates. The selling rate hovered around VNĐ26,200, roughly VNĐ130 higher than those at major banks.

Overall, the free-market rate last week rose by VNĐ150-250 against the previous week.

Meanwhile, major banks, such as Vietcombank, VietinBank and BIDV, kept their rates unchanged over the weekend. Their latest listed rates stood at VNĐ25,660 for buying and VNĐ26,070 for selling, down VNĐ100 from the previous weekend. This adjustment aligns with the trend of the central exchange rate announced by the State Bank of Vietnam.

The dollar on Monday traded around VNĐ26,110-26,160 on the unofficial market, with the buying rate rising by VNĐ40 and the selling rate falling by VNĐ10.

Meanwhile, Vietcombank on Monday listed its buying and selling rates at VNĐ25,660 and VNĐ26,070 per dollar, unchanged from the previous session. BIDV raised its rates by VNĐ10 on both sides, bringing the buying and selling rates to VNĐ25,690 and VNĐ26,070.

This has marked the first time in four months that the unofficial rate has exceeded the bank rate for both buying and selling.

The rise of the greenback in the unofficial market was driven primarily by seasonal factors. The final three months of the year typically see a surge in demand for foreign currency transactions, leading to larger and more frequent price fluctuations.

The shift of the rate from below to above bank levels signals a resurgence of speculative sentiment and a tendency to hoard foreign currency.

Since mid-June, the dollar in the unofficial market has dropped sharply, falling VNĐ50-350 below bank rates depending on the timing. It was unusual as the unofficial rate was often higher than bank rate.

Experts attribute this unusual situation to several factors.

First, foreign currency exchange activities at gold shops are facing tighter scrutiny due to inspections, causing both supply and demand to contract.

Besides, attractive VNĐ deposit interest rates of 8.5-9 per cent per annum have prompted many people to switch from holding the dollar to depositing the đồng.

Finally, a narrowing gap between domestic and global gold prices has reduced the demand for foreign currency used to finance gold smuggling.

Experts forecast that the dollar might face significant volatility in the unofficial market during the final quarter of the year due to seasonal factors, whereas the banking sector rate is expected to remain more stable.

"We believe the domestic exchange rate currently possesses a relatively strong buffer against external shocks and maintains a high level of stability compared to most regional currencies," analysts at the VNDirect Securities Company noted.

According to the analysis team at Techcombank, the đồng is projected to depreciate by only about 0.8 per cent against the dollar compared to the end of last year, hovering around VNĐ26,000 through the end of the year, supported by factors such as the interest rate differential between the đồng and the dollar, robust FDI inflows and steady remittances during the year-end period. 

Bizhub