The State Bank of Vietnam (SBV), the country’s central bank, will not make any adjustments to the foreign exchange rate between the dong and the U.S. dollar from now until the end of 2015, after the currency has been weakened three times so far this year.
The SBV will “enact all measures possible” to keep the foreign exchange rate and the forex market stable from now to the year end and the first few months of 2016, deputy governor Nguyen Thi Hong said in a media note late Monday.
Hong attributed the recent instability of the forex market to the “trading psychology and rumors for speculation and hoarding purposes.”
Vietnam’s central bank devalued the dong by one percent against the U.S. dollar for the third time this year on August 19, following depreciations in January and May, each by one percent.
Besides the latest devaluation of the Vietnamese currency, the SBV also extended the trading band of the interbank dollar/dong transactions to three percent.
With the official mid-point rate for interbank transactions set at 21,890 dong per dollar, the greenback is now allowed to be traded in Vietnam within a band between VND21,233 and VND22,547 a dollar.
Hong said such an adjustment by the SBV “was very strong already,” adding the central bank had “taken one step in advance” in making these moves.
The SBV had anticipated China"s devaluation of the yuan, as well as the possible interest rate hike of the U.S. Federal Reserves (Fed), so the recent adjustment is “flexible enough to meet the market development,” while it has also “given the Vietnamese dong a competitive edge,” Hong asserted.
China devalued the yuan by 3.6 percent in total in mid-August, while the Fed is expected to announce an interest rate hike in September.
But doubts have emerged about such a rate hike, given the plunge in global stock markets triggered by China"s economic slowdown, according to CNN Money.
The SBV’s announcement about keeping the foreign exchange rate stable came at a time when the prices of the greenback soared on both the official and unofficial markets.
State-run lender Vietcombank on Tuesday quoted the U.S. dollar at VND22,500. The price had reached a ceiling of VND22,547 to the dollar as of Monday afternoon, according to newswire VnExpress.
On the black market, the greenback was bought at VND22,750 and sold for VND22,800, nearly VND300 higher than the official rate.
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Vietnam to keespan foreign exchange rate stable till year-end: cbank
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