Foreign exchange rate margin relaxed

06/08/2010 - 65 Lượt xem

The State Bank of Viet Nam (SBV) has adjusted the VND/USD exchange rate margin as part of its drive to create a flexible exchange rate regime in the domestic financial market, according to banking official Truong Van Phuoc.

Phuoc, director of the SBV Department of Foreign Exchange Management, said the central bank extended the VND/USD exchange rate margin from the current 0.25 per cent to 0.5 per cent, effective January 2.

The move was one of several measures that the bank has applied since 2004 to better fit the economy’s rapid growth, he said.

"Over the past years, the central bank gave permission to domestic banks to freely organise exchange of foreign currencies," Phuoc said.

Thus, corporations and businesses would have a more flexible market for transactions.

Under this new policy, export companies would be able to shift from the US dollar to other strong foreign currencies like the euro if they found them profitable.

Phuoc said they would not have to depend on the US dollar as much as they have done in the past.

Many market experts predicted that the new exchange rate margin would result in a rise in the US dollar against the Vietnamese dong, but that did not occur.

Before the new policy was announced, local banks quoted the greenback at VND16,060 per dollar, 0.25 per cent lower than the inter-bank rate declared by State Bank of Viet Nam (SBV).

At 10 am after the issue of the new policy, the US dollar sold at VND16,040, 20 dong lower over the morning rate.

The market, experts said, had more US dollar sellers than buyers, and no major changes occurred after the announcement. Bank activity remained the same and few people purchased dollar for special purposes, they said.

Securities companies and foreign investors were the most concerned about the market’s new changes, they said. Some had wanted to sell millions of dollars for Vietnamese dong to invest in the securities market but they did not do so after the policy was announced, experts said.

Source: Vietnam News