Vietnamese banks have cancelled forward contracts to buy forex from SBV amid the downward of the greenback against the dong. (Photo: Nhan Dan newspaper)
Vietnamese commercial banks have cancelled forward contracts to purchase foreign currency from the State Bank of Vietnam (SBV), the country’s central bank, suggesting that they expect to buy forex in the market at softer prices, the Vietnam Economic Times reported.
SBV started to sell forex to banks for the first time on December 31, 2015, with the U.S. dollar priced for late March 2016 1% higher in comparison with the end of December. With such a move, the regulator seeks to drive the USD/VND rate to move less than 1%.
Banks registered to buy nearly $1 billion from SBV, but abolished 60% of the contracts at the end of January.
The greenback then continuously fell against the dong, prompting SBV to prevent the decline by setting its buying price of USD at 22,300 dong per USD. The interbank USD/VND rate stayed below the 22,300-mark as of early this week.
SBV started to apply the daily interbank USD/VND fixing on January 5 this year, which is considered more market-oriented and aimed to make the rate move in line with international and domestic happenings.
Parallel, SBV bought in $2.6 billion in forex from early February to the end of last week, and the amount could reach $3 billion this week, according to the newspaper.
The Vietnamese banking regulator sold billions of USD in several final months of 2015 to stabilize the forex market amid the strengthening of the greenback after China unexpectedly devalued the yuan and the Fed hinted interest rate hikes.