Surging demand for the US dollars at year end pushed the dollar/VND exchange rate up to the highest ever of VND21,570 on the unofficial market on December 1st, which will hurt local importers badly.
The surge usually come at the end of every year, when local businesses buy more shipments to prepare for the Lunar New Year season and foreign firms need to transfer dollars to their home. It’s also the due dates of other businesses, who have to pay US dollar debts.
Many commercial lenders are indirectly selling the greenback at higher rates than the State Bank of Vietnam’s regulated one by charging foreign currency transactions fee and cash counting fee and payment fee, many importers said.
Local importers have to accept to pay those extra fees as they have no other choice, said Vietnam Young Business Association chairman Vo Quoc Thang.
They need to pay their foreign suppliers in time, so they are willing to buy dollars at high prices, he said. With purchase orders’ prices remaining unchanged, these extra fees generate big losses to the importers.
Do Duy Thai, general director of the steel maker Thep Viet, said commercial banks sold the greenback at the exchange rate of VND21,550 per dollar.
“Both bank interest rate and the US dollar/Vietnam dong exchange rate are on a rise, leaving local businesses struggling to pay their imported shipments,” Thai said.
A director of a Ho Chi Minh City-based lender, who wanted to be unnamed, said banks bought dollars from exporters, who tried to take profits from the dollar’s surging demand by selling at high prices.
Therefore the lenders will incur losses if they sell dollars at the regulated rate, the director said.
The State Bank of Vietnam earlier announced it would continue to sell dollars to essential-product importers, but commercial banks said the supply didn’t meet the demand.
Dr. Tran Du Lich, member of the National Monetary Policy Consulting Council, recommended that the central bank should name the importers, who are allowed to buy dollars, so they don’t have to purchase on the unofficial market.
This move will also prevent local businesses from importing luxury products, which will widen the trade gap. Lich said. The central bank also has to strictly forbid illegal foreign currency exchanges, which are taking place at the so-called black market, he said.
Nguyen Hoang Minh, deputy director of the State Bank of Vietnam’s Ho Chi Minh City branch, noticed speculators pushed the dollar/VND exchange rate on the unofficial market up to cash in the rising demand.
Statistics of the branch shows that the amount of US dollar deposits reached VND188.2 billion ($9.41 million), rising 12 per cent so far this year. The amount of US dollar loans rose 35.4 per cent to VND184.880 billion ($9.24 million), according to the central bank’s HCMC branch.