Dong strengthens against dollar

Commercial banks have started to adjust the exchange rate since Monday many days after keeping a cap on VND22,547 regulated by the central bank on August 19.

The rates quoted by commercial banks have reduced by roughly VND70 to VND90 for the past three days.

After reduction on Monday and Tuesday, Vietcombank yesterday continuously cut the rate by VND20 against the previous day, quoting the buying/selling rates at VND22,340/22,430.

Vietinbank also cut the rate by VND20, listing it at VND22,380/22,440.

BIDV and ACB also listed at VND22,370/22,430, down VND20 against the previous day.

The buying/selling rates at Techcombank were VND22,355/22,455, down VND25 and VND5, respectively.

It was the first time since the central bank's devaluation of the dong against the dollar on August 19 the rate quoted at commercial banks was lower than the VND22,475 rate listed at the State Bank of Viet Nam's Operations Centre.

Industry insiders attributed the reduction to the application of new regulations taken by the central bank on avoiding the dollar speculation and hoarding in the economy.

According to Circular No15/2015/TT-NHNN on foreign currency transactions by credit institutions, which took effect on Monday, foreign currency transactions with banks must be accompanied by documents proving the purpose, amount and duration of payments.

The circular also states that if customers needed to settle with partners within two working days, banks can sell foreign currencies immediately.

When the payment term is more than three days, banks are only allowed to sell forward exchange. For forward exchange transactions, the maximum term is 365 days.

Previously, the central bank had also issued a decision on cutting the interest rate ceiling on dollar deposits to encourage the conversion of dollar deposits into dong deposits.

Under the decision, the interest rate ceiling on dollar deposits offered by commercial banks to organisations and companies was cut from 0.25 per cent to zero per cent per year, while the rate for individuals was reduced from 0.75 per cent to 0.25 per cent per year.