Demand for U.S. dollars is likely to soar in Vietnam later this year, putting more pressure on the dollar exchange rates, according to local bankers.
Nguyen Thi Ngoc Van, deputy general director of DongA Bank, said dollar demand seasonally increase at year-end, not only from enterprises but also foreign institutions preparing to repatriate their profits in dollar to their home countries.
DongA Bank has to carefully consider making dollar loans and gives priority to exporters who can generate dollar revenues, Van noted.
At a meeting in HCM City last week, CEO of ANZ Vietnam Dam Bich Thuy said the difference between lending rates in the dong and dollar was still high at about 7%-8%, which exerts pressure on the forex rate as many enterprises still wanted to borrow dollars.
If firms having no dollar revenues borrow foreign currency, their demand would place pressure on the forex rate, Thuy told participants.
Thuy added that many enterprises will shift to dong loans right after the State Bank of Vietnam lowers lending rates to 12% per year, so it will help relieve the pressure on the forex rate.
Le Duc Thuy, chairman of the National Financial Supervision Commission, also said the pressure would be bigger on the dong as many companies would need dollars for future payment.
Statistics from the central bank showed that outstanding loans at banks in the first half of this year increased by 10.52%, but credits in Vietnam dong expanded only 4.6% while loans in foreign currencies, mostly the dollar, rose by 27%.
Dollar funds now remain ample at banks so enterprises can buy dollars immediately but at higher prices, unlike the situation early last year when enterprises could not buy a penny from banks though they were willing to pay more.
In Vietnam, U.S. dollar has appreciated 5.04% since last July. Gold shops today trade the greenback at VND19,150/VND19,200, compared to VND19,090/VND19,120 July 6.
Vietcombank, meanwhile, kept the forex rates lower at VND19,090/VND19,095, almost unchanged from early July. (Saigon Economic Times)
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