HCM CITY — The exchange rate between the Vietnamese dong and the US dollar have fallen sharply on the days before Tet (Lunar New Year) because of increased supplies of the greenback.
On Wednesday, commercial banks quoted buying and selling prices of US dollars at VND20,850 and VND20,930, respectively, down by VND106 compared with the ceiling rate on Monday.
Although the Government has banned US dollar trading activities on the free market, some places still operate.
The buying price of US dollars at these markets have fallen by VND50 to VND20,970 per dollar, while the selling rate stood at 21,000. If compared with the rate recorded 10 days ago, the dollar price on the free market fell by VND300 per dollar, VND70 higher than the rate quoted at commercial banks.
Meanwhile, the forex rate at the inter-bank market was VND20,963 per dollar, VND100 lower than the ceiling rate of VND21,036.
Independent market observers attributed the cut in US dollar prices to two reasons, one of which was a significant increase in supply of dollars, and the other a decrease in the market's purchasing power.
Several commercial bank directors said that shortages of dong caused many enterprises to sell US dollars to have dong to pay salaries and bonuses for their employees.
The general director of one major bank that is heavily involved exports and imports said that his bank had bought a large volume of dollars over the last three days.
The Viet Nam Export and Import Commercial Joint-Stock Bank (Eximbank) also revealed that it had purchased US$300 million over the last month.
Many individuals have had to sell US dollars to prepare for Tet. The increasing number of overseas Vietnamese who returned home for Tet had also significantly enriched the country's dollar sources at this time, according to experts.
Nguyen Thanh Son, deputy minister of Foreign Affairs, said that last year the country's inward remittances reached over $9 billion, a record level, making Viet Nam one of the top 10 countries receiving the highest amount in remittances.
HCM City alone received $5 billion in 2011.
While dollar sources look to be plentiful, enterprises' and individuals'demand for the greenback has fallen.
Hoang Anh Tuan, owner of a gold shop in HCM City's District 1, said that individuals were not buying US dollars.
Also, commercial banks in recent months have launched policies of limiting dollar loans to companies, thus restricting their ability to make payments to banks. —VNS