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Vietnamese central bank sets daily exchange rate

Xinhua, January 4, 2016 Adjust font size:

Vietnamese central bank on Monday started listing inter--bank average exchange rate between Vietnamese dong (VND) and U.S. dollar (VND) on a daily basis, instead of fixing a rate for a long period of time as before.

Accordingly, the inter--bank average exchange rate on Monday was set at 21,896 VND for one USD, higher than the previous rate of 21,890 VND/USD fixed from Aug. 19, 2015.

The daily--adjusted rate will be "the basis for credit organizations and branches of foreign banks, which are allowed to provide foreign currency services, to decide buying and selling rate between VND and USD", the State Bank of Vietnam (SBV) said on its website.

The new rate calculation will be based on the exchange rate changes in the inter--bank foreign exchange market, monetary developments in international market of foreign currencies which are involved in trading, investment and financing with Vietnam.

The new policy will enable the exchange rate to be flexibly adjusted following domestic demand on foreign currency and global monetary fluctuation, while still maintaining the managing role of the central bank, said the SBV.

This is among measures to elevate the value of VND, stabilize foreign exchange rate and foreign exchange market, thus contributing to stabilizing macro--economy, supporting production and business activities, it said.

The Vietnamese central bank said it will continue implementing measures, as well as stands ready to sell foreign currency if necessary to stabilize foreign exchange market and maintain foreign exchange rate in allowed trading band.

After the announcement of the central bank, VND/USD exchange rates at several Vietnamese commercial banks were adjusted higher compared to the previous trading day on Dec. 31, 2015.

SBV Governor Nguyen Van Binh said late December that the fixed rate would be replaced by a flexible rate to better manage the foreign market and to prevent USD hoarding.

Do Ngoc Quynh, an official from the Bank of Investment and Development of Vietnam was quoted by the Vietnam's state--run news agency VNA that the new policy is suitable with the situation of the current market, which often has unusual fluctuations.

Meanwhile, Nguyen Van Han, a representative from Vietnam's TMT automobile company said with the new policy, businesses will have to pay more attention to watch the daily changes of VND/USD exchange rate for suitable business plan, reported VNA.

In 2015, the VND was devalued three times against the U.S. dollars, each by one percent, in January, May and August. The SBV also announced two trading band adjustments in August, which collectively widened the trading band for VND/USD transaction from one percent to three percent. Enditem