March 10, 1999
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| March 10, 1999 | atimes.com | |
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| Southeast Asia Vietnam central bank official explains new forex management HANOI - Improvement of the management mechanism of foreign exchange rates since late February has allowed the VND exchange rate with foreign currencies to respond to the supply-demand balance on the market, Vice Governor of the State Bank of Viet Nam (SBV) Duong Thu Huong wrote in an exclusive article for Viet Nam News Agency. The SBV Governor has issued a decision allowing credit organizations licensed to deal in foreign currencies to fix their selling and buying rates within a plus or minus 0.1 percent daily alteration on the official exchange rate announced by the State Bank. Only one official exchange rate is announced daily based on the overnight exchange rate between the U.S. dollar and the Vietnamese dong on the interbank market instead of the previous two rates (the official exchange rate and the average exchange rate between the actual buying and selling rates on the interbank market), according to this decision. Vice Governor Huong noted that on Feb. 26, right after the announcement of the decision, the VND-USD exchange rate on the free market increased from VND 13,860 to VND 14,000 and even VND 14,150 to the U.S. dollar. The daily transaction volume in foreign currencies between the banks and their customers dropped by between $3 million and $5 million. She stressed, however, that the fluctuations were largely due to psychological factors, and that the VND-USD exchange rate on the free market dropped to between VND 13,950 and VND 13,980 on Feb. 27, and between VND 13,890 and VND 13,920 on March 5. The banks' daily transaction volume in foreign currencies has also gradually increased to an average of nearly $40 million. According to Huong, savings deposits in Vietnamese dong have continued to rise after the announcement of the new forex management regulations. A State-owned commercial bank was able to mobilize VND 60 billion in savings from Feb. 26-Mar. 3. The Vice Governor said this showed that the official exchange rate has reflected fairly objectively the supply-demand balance on the foreign currency market, and is coming closer to the real purchasing power of the Vietnamese dong. She added that with the new mechanism in operation, the State's administrative interference into the forex market will be gradually eliminated and replaced by indirect tools to suit the market economy. This reflects Viet Nam's determination to integrate into the regional and world economy and direct its economic development along the market mechanism with respect to the market's rules and with the State's regulation. (Asia Pulse/VNA) | |||||||||
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