The enigmatic silence on the foreign currency market The state management agencies kept silent when something unusual happened in the foreign currency market. As a result, people had no other choice than making a wild guess about the market prospect.   Just some days after Tet, the foreign currency market got “choppy” with a lot of experts suggesting of devaluating the local currency to help boost exports. The market got scorching hot on February 21 when a rumor was spread out that President of BIDV, a big bank, and some other bankers were arrested. The dollar price quoted by commercial banks immediately hit the ceiling level, and for the first time, exceeded the VND21,000 per dollar threshold after many months of stabilization, staying at less than VND20,900 per dollar. At that time, the dollar price on the black market was 0.3 percent higher than the ceiling level quoted by commercial banks. The State Bank of Vietnam then successfully reduced the fever by denying the rumor about the dong devaluation, while making public about the foreign currency reserves. The President of BIDV also had to turn up in person before the public to prove that he was safe. A same communication plan was implemented in the April’s dollar fever. The suggestion about the country’s name changing led to the misunderstanding that Vietnam may change the currency. However, the foreign currency market returned to the normal track after the central bank released a statement, denying the possibility. Since June 28, when the State Bank depreciated the dong by 1 percent, no message about the upcoming policy has been conveyed to the public. And no action of intervening in the market has been made by the state management agencies, even though the dong/dollar exchange rate has been fluctuating more heavily. Meanwhile, bankers have refused to give answers to the reporters’ questions about the market performance. Since people cannot find the answers to their questions about what is happening with the foreign currency market from official sources, they have been trying to make wild guess. The two reasons cited are the trade deficit, which leads to the high demand for dollars to make payment for imports, and the higher domestic gold price which has prompted people to import gold illegally for domestic sale for profit. Securities investors have whispered in each others’ ears that the US may reduce the bailout and stop the monetary policy loosening, which may lead to the fact that the US investment funds would restructure their portfolios by withdrawing money from less attractive markets. Vietnamese investors have every reason to keep that worry, especially when they see foreign investors continuously selling stocks in the stock market. The moves by commercial banks are also questionable to people. On June 24-28, or the days just before the day the State Bank announced the one percent devaluation of the dong, the dollar trading volume on the interbank market saw a sharp increase, from VND49,209 billion a week before to VND125,460 billion. Meanwhile, some businesses complained that banks refused to sell dollars to them, or only accepted to sell dollars at the prices higher than the quoted prices. To date, the State Bank still has not sent any official message, explaining the dollar price fluctuations over the last days, and it also has not mentioned any measures to intervene in the market. The silence may do more harm than good, because this may raise the questions about Vietnam’s foreign currency reserves and the capability of the State Bank. VNE