The State Bank of Vietnam
(SBV), the country’s central bank, has not tapped into its foreign currency reserves to intervene in the forex market although the U.S. dollar is appreciating considerably against the Vietnam dong.
Local commercial banks, still having positive forex positions on November 23, were selling U.S. dollar to meet their clients’ demand, VnEconomy reported.
From the start of November, SBV revised up the reference USD/VND rate for nine consecutive days, causing the rate to weaken 1% in comparison with the beginning of this year when the new fixing mechanism was launched.
This move indicates that the banking regulator is now more flexible and not striving to keep the dong steady at all costs in the context of a stronger U.S. dollar, a significant depreciation of the Chinese yuan and other regional currencies.
SBV may pump forex into the market in the light of a potential big shock for the USD/VND rate that can lead to macroeconomic distortions.
The banking authority can also make interventions when the rate fluctuates beyond an implicated range, possible 1-2%, which is aimed to support exports and dilute external impacts, said the newspaper.
SBV reportedly sold nearly $10 billion to banks last year to rein wide fluctuations in the local forex market after the Chinese central bank dumped the yuan.
The U.S. dollar is firmer against the dong on Thursday morning as the SBV-set mid-point USD/VND rate increased 13 dong from Wednesday to 22,131.
Parallel, major banks including Vietcombank, VietinBank and BIDV quoted the greenback at 22,690 for bids and 22,790 for asks, up 170-190 dong per USD from a day earlier.
Notably, the selling price of the U.S. dollar was fixed at 22,795 at Eximbank, the upper limit set by the banking regulator for November 24.