Currency

Black dollar market gets choppy The dollar price has been increasing steadily for a long time, though economists and state officials affirmed before that the price rise was just temporary. Especially, the dollar price on the black market has exceeded the VND21,700 per dollar threshold.   According to Dai Doan Ket, the dollar was traded at VND21,720-21,730 per dollar on July 8 on the black market, the highest peak since the day the State Bank adjusted the dong/dollar exchange rate on June 27. Meanwhile, commercial banks quoted the dollar price at the ceiling level of VND21,246 based on the interbank exchange rate of VND21,036. The buy price was just VND6 per dollar lower than the sell price. Banks have continuously raised the dollar buying price by VND100 per dollar since June 28. On July 8, commercial banks once again raised the dollar buy price, the move, which in the eyes of analysts, aims to compete with the black market to buy dollars from the public. People now refuse to sell dollars to banks because they can sell dollars for better prices on the black market. Dr. Le Xuan Nghia, Head of the Business Research Institute, denying the impacts of the gold price fluctuations on the exchange rate, said that the dollar has become more expensive due to the trade deficit in May and June. He also said the dong has depreciated because of the dong deposit interest rate reductions, which has made the currency less attractive. Meanwhile, Deputy Governor of the State Bank Le Minh Hung, has blamed the dollar price rise on the banks’ decision to keep dollars when the dong interest rate reduces. Thoi bao Kinh te Vietnam cited the report of an investment institution as saying that the closing dong/dollar exchange rate on the interbank market on July 5 was VND21,290 per dollar, or 0.21 percent higher than the ceiling level. The institution hoped the State Bank would sell dollars to intervene in the market. Hung of the State Bank also affirmed the bank would put dollars into sale when it’s really necessary. However, there has not been any sign of the central bank intending to do so. And the central bank is believed to have every reason not to sell dollars at this moment. Any moves to sell dollars to intervene in the market would only be made after considering the foreign currency position of the whole banking system. The updated information showed that the minus position of the system has been improved and the system can balance and sales and purchases itself without the central bank’s support. Nevertheless, the steady rise of the dollar price on the black market has still caused worries, even though the trading volume in the market is modest, which makes nothing if compared with the trading volume of the banking system. The noteworthy thing is that the black market has got choppy again after a long period of staying in peace. More and more transactions still have been made on the market despite the heavy punishments stipulated in the Decree 95 which has been valid over the last two years. The decree says violators may be imposed the fine of up to VND500 million. In related news, the domestic gold price has been on the decrease. The price dropped by VND400,000 per tael on July 8 from last Saturday. At 8.30 am. SJC reportedly was traded at VND37.30 million. Source: TBKTVN