By Thuy Trieu - The Saigon Times Daily
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| An unidentified person counts U.S. dollar notes. The greenback on the unofficial market rose to VND19,340 on Tuesday - Photo: Le Toan |
HCMC – The State Bank of Vietnam on Tuesday increased its inter-bank exchange rate between the Vietnamese dong and the U.S. dollar to VND18,932, effective on Wednesday, from the VND18,544 that has been kept unchanged since February. This means a devaluation of the local currency by 2.09%.
Given the trading band of 3% on either side of the official exchange rate, commercial banks on Wednesday can raise their U.S. dollar price to the highest level of VND19,499.
Explaining the adjustment, the central bank said on its website that the move was meant to curb the trade deficit in the coming months.
It seems the market has expected the move beforehand, as the greenback surged strongly on the underground market and at banks on Tuesday after a slight upward movement over the past few weeks.
A big joint-stock bank in HCMC, for example, on Tuesday offered the dollar to enterprises at VND19,340 and bought this hard currency at VND19,300, while another small lender in District 1 sold the dollar at VND19,370 in the morning before lowering it slightly to VND19,350 in the afternoon.
Such spot rates were much higher than the formal rate of VND19,100 allowed by the central bank.
On the unofficial market, the dollar also soared sharply on Tuesday, leaping by VND500 to VND19,340 per dollar. This price was maintained until the end of the day.
A private money dealer told the Daily that demand for dollars had increased on Tuesday but supply was still ample. Some banks have been seeking to buy the dollar on the unofficial market, he said.
The firmer dollar triggered a sharp rise in the local gold price compared to a milder increase in the global price. Saigon Jewelry Holding Co. (SJC) said they had to revise the gold price 14 times on Tuesday while the global gold price moved up by a slight US$2.6 an ounce.
SJC gold as of 5 p.m. on Tuesday had been quoted at VND28.46 million per tael, up VND170,000 from Monday. A tael equals 1.2 troy ounces.
The higher demand made the local gold price almost match the global price after lagging far behind in previous days, said Nguyen Cong Tuong, head of the sales department of Saigon Jewelry Holding Co.
Tuong said the company on Tuesday bought 2,000 taels and sold 2,500 taels compared to its selling volume of only 1,000 taels on Monday. He said some traders expected the global gold price would exceed US$1,250 an ounce this week so they boosted buying. By 5 p.m. on Tuesday, spot gold had been quoted at US$1,226.6 an ounce on the European market.