Vietnam Starts New Forex Rate Mechanism to Tackle Hoarding

Tuan Minh

11:44 04/01/2016

BizLIVE - The Vietnamese central bank has begun applying a new mechanism to set the benchmark rate for the USD/VND pair, in a move to make the rate more ‘market-oriented’ and discourage forex hoarding.

Vietnam Starts New Forex Rate Mechanism to Tackle Hoarding

a front view of the State Bank of Vietnam's headquarters. (Photo:

The State Bank of Vietnam (SBV), the country’s banking regulator, on January 4 announced the new reference exchange rate for the USD/VND pair at 21,896, compared to 21,890 which had been in place since August 19, 2015.
The ‘interbank forex rate’ is determined in alignment with movements of a basket of currencies of countries which have considerable exposure in trade, debt and investment relations with Vietnam, adding to the supply-demand of forex and macroeconomic balance, the monetary authority said in a statement filed on its website.
“The announcement of the interbank forex rate is the next step of the SBV’s roadmap aimed to uphold the Vietnamese dong, stabilize the forex rate and market, contributing to macroeconomic stability and supporting business operations,” the bank said.
The rate can be adjusted up/down on a daily basis in line with market movements, it said, without revealing the components of the currency basket.  
SBV Governor Nguyen Van Binh told local media last week that the new mechanism would reduce speculation on the foreign currency.
At the open, most commercial banks in Vietnam increased slightly both selling and buying prices of the greenback. The USD/VND rate quoted by Vietcombank stayed at 22,470-22,540 for bid and ask, respectively, at 11:00 am.
Free-market prices of the U.S. dollar in Hanoi was lifted to 22,640 for buying and 22,665 for selling, up respective 40 dong and 35 dong from those before the New Year holiday.
The reference VN Index of the Hochiminh Stock Exchange was up 0.08% to 579.5 at the break time on Monday.