Dollar rises above black market rate

The official exchange rate for the US dollar rose above the black market rate yesterday for the first time, following recent moves by the State Bank of Viet Nam (SBV) to fix the forex market. Commercial banks yesterday quoted the dollar buy/sell prices at VND20,880/20,930 each while forex vendors on Ha Trung and Hang Bac were quietly trading at VND20,850/20,940.
The black market rate used to be VND1,000-1,500 higher than in banks, causing numerous problems for monetary policy makers.
The SBV in recent weeks has raised the USD/VND exchange rate on the interbank market every day in line with market moves, instead of leaving it unchanged as before. Yesterday, the interbank exchange rate was set at VND20,723 per dollar.
Many banks reported that they had already bought dollars from individuals and been able to sell them to those who were going abroad, said Nguyen Hoang Minh, Deputy Head of SBV's HCM City Branch.
The SBV has raised the compulsory reserve ratio, imposed on foreign currency deposits, from 4 per cent to 6 per cent, and set a cap of 3 percent interest on personal foreign savings accounts and 1 per cent for institutions.
"The market response to the 3 percent cap is very clear," Vietinbank's Chairman Pham Huy Hung said. "People are likely to prefer the Vietnamese dong and will swap their dollar deposits to dong for the more preferential interest, which in turn will help raise dollar reserves in banks." Another FX official at a joint stock commercial bank in Hanoi said that it was the first time the bank had been able to buy the dollar at the quoted price. In recent months, it had been exceeding the SBV's price cap to avoid losing customers to the black market.
Another FX official at Vietcombank's branch on Hanoi's Ngo Quyen street said that the branch had raised the amount of dollars individuals could buy from US$100 to $500. 

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