Dong depreciates again, put under hard pressure
VietNamNet Bridge – The 13th adjustment in October of the dong/dollarexchange rate made by the State Bank of Vietnam has made the dong lose 0.73percent of its value since the beginning of October.
 |
The 13th adjustment in October has led to the 0.73 percent depreciation of thedong over the last four weeks. Meanwhile, the Governor of the State Bank ofVietnam on September 7, committed that the dollar price would not increase bymore than one percent by the end of the year.
Securities companies have said that the latest dong/dollar exchange rateadjustment is not the good news for the stock market, because investors now havemore reasons to believe that the exchange rate would be adjusted further towardsthe end of the year, which would put harder pressure on the gold prices and makethe inflation problem more serious in the last months of 2011.
Deputy Chair of the National Finance Supervision Council Le Xuan Nghia said at arecent workshop in HCM City that if the dong interest rate is forced todecrease, the dong/dollar exchange rate would go on the opposite direction.
“In the next 18 months, the stability of the banking system and the exchangerate would remain the two biggest challenges for the national economy,” Nghiasaid.
Nghia also said that the “occupy Wall Street” movement, if spreading out andhaving big impact on the financial sector, may force the global stock markets toimpose stricter standards and higher transparency on their operations. If so,this would influence some stock markets in Asia, including Vietnamese, thuscausing shocks in gold price and exchange rate.
“Businesses need to pay more attention to the interest rate and exchange raterisk management and should not rely on the market factors which they cannotcontrol,” said Huynh Buu Quang, a senior executive of HSBC Vietnam.
Quang went on to say that the State Bank of Vietnam should show commercial bankshow to restrict the lending in foreign currencies which serve unreasonablepurposes, and it should drive the exchange rate in a flexible way which isunpredictable to speculators, thus helping ease the speculation.
Analysts have pointed out that the dong/dollar exchange rate now still partiallydepends on the gold market. Gold is now serving as the place for speculators toshelter amid the high inflation. Where to find enough dollars to satisfyspeculators’ thirst for gold? The question makes experts think that it isnecessary to tighten the control over the gold market and put the goldtransactions into the normal track.
Money has been kept at banks and buried in gold, while the national economy islacking capital and resources for development. This problem remains unsettled,because bankers believe that gold and foreign currency prices remain unknowns.
The exchange rate has been stabilized at new high peaks over the last week.Meanwhile, the State Bank has vowed to heavily punish illegal foreign currencytransactions when raising the fines on the activities by 7-10 times (300-500million dong). The central bank’s inspectors also regularly tour commercialbanks to be sure that the exchange rates applied by commercial banks intransactions are not higher than the ceiling levels.
While the dollar price quoted by commercial banks increased, the black market’sprice yesterday October 28 dropped to 21, 300-21,550 dong per dollar, a decreaseof 200-250 dong per dollar in comparison with October 27.
In related news, the gold price increased to 44.75-45.05 million dong per taelon October 28.
OTHERS
Solvay to cut CO2 emissions at Spain soda ash, bicarbonate plants with biomass project
Chinese ammonium phosphate producers halt offers amid firm sulfur prices
Import-export turnover rises over 12% in two months
Trade Ministry outlines orientations toward 12% export growth target for 2025
Trade offices to strengthen ties with multi-stake holders to boost exports