|Transactions are conducted at Techcombank. The official dollar/dong rate will now be adjusted daily following a State Bank decision. — VNA/VNS Photo
HA NOI (VNS) — Vietnamese dong weakened 10 to 50 dong per dollar at commercial banks yesterday morning, after the central bank lowered the dong's reference rate for the first time since August.
The State Bank of Viet Nam (SBV) yesterday said the fixed reference inter-bank exchange rate was VND21,896 per dollar, six dong higher than the previous level.
This is the first time the central bank has quoted the reference rate following the new exchange rate mechanism that it announced in Decision No 2730/QD-NHNN, dated December 31, 2015.
The decision said the central bank would set a central rate every day, instead of maintaining a fixed rate for a long period of time. The trading band of the new rate continues to be plus or minus three per cent.
The ceiling and floor rates remain almost unchanged with yesterday's minor adjustment.
At Vietcombank and BIDV, a dollar was bought at VND22,470 per dollar, increasing 20 dong over the last trading session, while its selling prices hovered around VND22,540.
Vietinbank bought the greenback at VND22,465 per dollar, up 15 dong over the previous session, although its selling price was down 5 dong, at VND22,535 per dollar.
ACB raised both buying and selling prices by 10 dong, quoting the rates at VND22,430 and VND22,530 respectively, while Eximbank increased the prices by 15 dong, listing them at VND22,445 and VND22,535 respectively.
The buying price at Techcombank rose by up to 50 dong, at VND22,450 per dollar, while the selling price increased by 15 dong to VND22,545 per dollar.
The SBV said the dollar/dong rate would now be based on the exchange rate changes in the inter-bank foreign exchange market, as well as monetary developments in countries that are involved with Viet Nam's trade, investment and financing to a major extent.
The daily-adjusted rate was to be in line with macroeconomic balance and would be the basis for local credit institutions and foreign banks' branches to provide their foreign exchange services, it said.
The central bank said the new mechanism would enable it to ensure its management objectives, while letting the exchange rate move flexibly as per global monetary fluctuations.
These are part of its measures to improve the position of the Vietnamese currency, stabilise the foreign exchange market and the economy, and support production and businesses activities.
The central bank would carry out comprehensive monetary measures and was willing to sell foreign currencies, if necessary, for proper exchange rate developments and a stable foreign exchange market, it said.
SBV Deputy Governor Nguyen Thi Hong told the press that the more flexible exchange rate operations would be suitable to the global trade and investment situation, after the countries had entered a variety of free trade agreements (FTAs).
She referred to Viet Nam's conclusion of negotiations for FTAs with the Eurasian Economic Union, the European Union, South Korea and the Trans-Pacific Partnership last year. The country also became part of the ASEAN Economic Community, which was established last December 31.
"A flexible rate mechanism is necessary to guarantee competitiveness in the context of deeper integration," Central Institute for Economic Management Deputy Director Vo Tri Thanh told news website ttvn.vn.
While improved macro-level stability, especially low inflation, enabled rate operation flexibility, any continuing fixed rate with an overly valued dong was likely to cause the country to loose its competitiveness.
Nguyen Van Han, an accounting official at automobile firm Cuu Long TMT, told the Vietnam News Agency that enterprises always preferred stable exchange rates, which helped them better control costs and assure profits in their business.
Now they would have to track market developments more closely in the face of everyday exchange rate fluctuations, he said.
BIDV's monetary and capital source director Do Ngoc Quynh said the situation would require banks to provide financing derivatives transferable with terms, in order to help enterprises work out proper business development and risk prevention plans.
"I believe this will stimulate both banks and enterprises to approach management and business methods that are more suitable to standards and routines of the international markets," he said.
Thanh said more frequent rate fluctuations following the new mechanism would also curb dollar speculation in the domestic market.
This would facilitate a balance in foreign currency demand and supply, and support the Government's efforts to prevent "dollarisation" in the economy, industry insiders said. — VNS