Forex rate stable after dong devaluation

11:50 | 02/06/2015 Economy

The foreign exchange market has stabilised after fluctuations caused by the State Bank's recent decision to devalue the Vietnamese dong by 1%, according to independent market analysts.

Forex rate stable after dong devaluation

After the central bank's devaluation, banks have adjusted their forex rates, creating a new pricing level for the US dollar.

A representative of a foreign bank in Vietnam, who declined to be named, said the forex rate was VND21,800 per US dollar.

Techcombank, for instance, has raised its selling price for the US dollar to VND21, 870, while Eximbank is selling the greenback at VND21,860.

At Vietcombank, the exchange rate is between VND21,795 and VND21,855 per dollar.

On the Hanoi free market, common forex rates are around VND21,850 and VND21,855 per US dollar. In Ho Chi Minh City, the greenback is selling at VND21,850 and VND21,870.

Meanwhile, the central bank continues to apply the buying and selling exchange rates of VND21,600 and VND21,620 per dollar, respectively.

The average forex rate on the inter-bank market was fixed at VND21,673 on its website.

Analysts, however, said the new rate would remain stable because supplies of foreign currencies are abundant.

The foreign exchange market's liquidity is rather plentiful.

According to reports from credit institutions, foreign bank branches' total value of interbank transactions in the second week of May was VND46,934 billion (converted from US dollar), up by VND3,386 billion compared with the figure in the previous week.

Additionally, overseas remittance from overseas Vietnamese to Ho Chi Minh City alone reached US$1.4 billion in the first four months, up by 19.6%. The figure for Viet Nam is estimated to be between US$13 billion and US$14 billion for the entire year.

A report from the Foreign Investment Department also said that foreign investors registered US$2.29 billion in the first five months of the year. In the period, the Foreign Direct Investment (FDI) enterprises disbursed VND5 billion, a year-on-year increase of 7.6%.

The National Assembly's regular session in April also reported that about US$550 million of Official Development Assistance (ODA) has so far this year been disbursed, up by 11.4%.

"When capital of FDI and ODA projects is disbursed, this means that an additional volume of foreign currency is pumped into the foreign exchange market, thus helping balance supply and demand," Dr. Nguyen Tri Hieu, a senior economic expert, told Dau Tu Chung Khoan magazine.

Nguyen Thi Hong, deputy governor of the State Bank of Vietnam, said that fluctuations of forex rates were still within the permissible level. Credit institutions' and people's legitimate demand for foreign currencies had been satisfied by the banks.

"In the coming time, the central bank will apply several measures and tools to stabilise the forex rate and the foreign exchange market, based on the newly established rate, and put a close watch on fluctuations of the market as well as economic and monetary predictions to ensure proper and effective management," she said.

Source VNS