VINACHEM

Vietnam dong continued to slightly fall against the U.S. dollar on October 2 after staying firm for a long time.

Vietcombank quoted the greenback at VND21,290 on October 2 morning before lowering it to VND21,280 in the afternoon. Meanwhile, Techcombank sold a dollar at VND21,295. Since mid-September, the dong-U.S. dollar exchange rate has increased mildly and remained stable in general.

Earlier, the dollar had stood at VND21,210-21,230 for around a month, much lower than the ceiling level of VND21,458 and even lower than that before the central bank devaluated the domestic currency by 1% to support exports in June.

After the central bank’s move, the local currency, unlike earlier expectation, kept appreciating due to strong dollar supplies backed by trade surplus, foreign direct and indirect investment inflows, official development assistance (ODA) capital and overseas remittances.

Regarding the appreciation of the greenback over the past 10 days, an economic expert said enterprises have had higher demand for foreign currencies at the end of the third quarter to pay for imports. Besides, foreign-invested enterprises also have to buy dollars for repatriation to their parent firms.

As mobilization rates are low, banks also have demand to use dong funds to buy U.S. dollars, thus piling pressure on the exchange rate.

BIDV Securities Company in a report released on October 2 said the exchange rate is expected to inch up towards the end of this year. It is almost unlikely that the rate is adjusted further in the fourth quarter of this year.

In case the country wants to speed up exports, the dong could be depreciated but at a modest rate (even lower than 1-1.43% within this year as announced by the central bank’s governor Nguyen Van Binh at a question-and-answer session before the National Assembly early this week) as Vietnam’s public debt is still high, the report said.

Average rates on the inter-bank market continued to decline last week, according to Vietnam News Agency.

The overnight rate stood at 1.50% per annum, down 0.14 percentage point against a week earlier. Average rates for tenors of one month or less hovered from 1.87% to 2.75% per annum.