Vietnam Central Bank Doubles USD/VND Trading Band to +/-2 per cent
The State Bank of Vietnam (SBV), the country&rsquos central bank, has decided to widen the daily trading band for the U.S dollar and Vietnam dong to plus or minus 2 per cent from the current 1 per cent, effective from June 27, 2008.
Credit organizations can trade the U.S dollar with trading band of +/-2 per cent against the USD/VND exchange rate in the interbank market announced daily by the SBV.
For other foreign currencies, credit institutions can themselves quote buy and sell exchange rates.
Central bank has also asked credit organizations not to collect any fees on exchange rate transactions regarding spot, swap and forward.
Banks must not buy and sell VND and USD via a third currency.
The governor Nguyen Van Giau said central bank extend trading band with aim at stabilizing FX market.
Vietnam has 3,591 foreign currency exchange desks at present and the SBV will ask them to strictly implement requirements on foreign currency trading, he said.
The government has had a feasible trade deficit controlling measure by cutting public investment and the country has net foreign currency reserves of US$20.7 billion. Therefore, Vietnam has no policy to devalue domestic currency.
Speculators will face risks if they continue to hoard dollars from now on, Giau said.
The SBV will keep the base interest rate for Vietnam dong unchanged at 14 per cent per annum from July 1. The re-financing rate will remain at 15 per cent per annum and the discount rate at 13 per cent.
Giau said commercial banks now are not suffering liquidity tension, but the situation has been improved significantly. (Local sources)
Vietnamese
