The pressure on dong/dollar exchange rate may be greater

VnnNews – Experts have warned that the dong/dollar exchange rate would bear greater pressure towards the end of the year.

VnnNews – Experts have warned that the dong/dollar exchange rate would bear greater pressure towards the end of the year. The price of the dollar on the black market has increased, while businesses complain that they find it difficult to purchase dollars.

Dong/dollar exchange rate soars again

Dollar price up, businesses find it difficult to borrow in dollars

< />Dollars still in short supply 

The dollar price on the black market has climbed to 19,190-19,220 dong per dollar, a slight increase of 20 dong per dollar in comparison with last week.

Meanwhile, though banks still keep their quoted prices unchanged, businesses say they cannot buy dollars at the price quoted by banks, now at 19,100 dong per dollar. An importer said his company has to pay 40-100 dong per dollar additionally to purchase dollars from banks, regardless of whether they are joint-stock or state-owned banks.

A director of a branch of a big state-owned bank has confirmed this. The executive said though many export companies commit to sell dollars to banks, they do not sell them according to their commitment. Instead, they try to keep dollars in their accounts because they hope the dollar price will increase.

Banks have to purchase dollars from different sources at high prices. Therefore they have to sell dollars to clients at prices higher than the quoted prices.

The executive revealed that there are many ways for banks to sell dollars at prices higher than the allowed ceiling levels. Banks now do not “dodge the laws” by collecting additional fees when selling dollars anymore because this has been prohibited by the State Bank.

In fact, the dollar supply has become shorter than previously, but the situation is not too serious. An import company said if accepting to purchase dollars at high prices, businesses will be able to buy dollars immediately, and if wanting to buy dollars at the prices quoted by banks, they will have to wait. As such, the situation seems to be better than earlier this year, when businesses could not buy dollars even if they accepted to buy at high prices.

The bank’s executive has confirmed that the demand for the dollar has been forecasted to increase in the last months of the year, which means the pressure on the dong/dollar exchange rate will be greater. He said the demand for dollars from production companies that need to import materials for local production has begun increasing.

Meanwhile, according to Nguyen Thi Ngoc Van, Deputy General Director of Dong A Bank, in general, the demand for dollar always increases towards the year’s end. The demand comes not only from businesses that need dollars to make payment for imports, but also from foreign organizations which want to buy dollars to transfer their profit abroad.

In a meeting held in HCM City late last week, Dam Bich Thuy, General Director of ANZ bank Vietnam, said that the large gap between the dong and the dollar interest rates (now 7-8 percent) is now putting pressure on the dong/dollar exchange rate, when many businesses still want dollar loans. If businesses do not have earnings in dollars, they will have to collect dollars to pay debts when the loans mature, thus putting greater pressure on the dollar supply.

“If the State Bank succeeds in slashing dong lending interest rates, there will be a wave of businesses shifting to borrow in dong. And before they shift to borrow in dong, they will have to buy dollars to settle current debts. This will also put pressure on the exchange rate,” Thuy warned.

Le Duc Thuy, Chairman of the National Finance Supervision Council, agreed. He said last time, many businesses borrowed in dollars and sold dollars to the market, thus leading to the artificial exchange rate decreases. However, in the time to come, when businesses buy dollars to pay debts, the pressure on the exchange rate will be greater.

“Only when the State Bank can settle the problem in the dong interest rates, will the issue of exchange rate be settled,” Thuy said.

Source: Thoi bao Kinh te Saigon

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