LookAtVietnam – The supply and demand of dollars is still far from balanced, despite strong commitments by SBV and commercial banks to sell dollars and stabilize the market.
Vietcombank General Director Nguyen Phuoc Thanh reported that the volume of foreign currencies his bank has sold recently increased by only a little over November. Thanh admitted that the supply is not large at this moment, as exporters are still reluctant to sell dollars to banks because they believe the dollar price will increase even further.
Meanwhile, demand for foreign currencies to import goods for Tet has risen dramatically and made banks unable to provide enough dollars.
According to VnMedia on December 14, Maritime Bank stated it has provided some 50 million dollars to Petrogas Vietnam, Vietnam Steel Corporation, Vietnam Post and Telecommunication Group, Vietnam Coal and Mineral Industries Group. This modest volume is really not worthwhile when compared with the high demand at year’s end.
Demand for foreign currency loans through import companies has also increased. Ho Huu Hanh, Director of HCM City Branch of SBV observed that foreign currency loans from local banks now account for 25 percent of the total outstanding loans, higher by 23 percent over mid-2009. Foreign currency loans have not increased sharply because importers worry about the dong/dollar exchange rate fluctuations
Bankers believe that demand for foreign currency loans will increase in early 2010, after the short-term interest rate subsidy program terminates. Therefore, banks have pushed up dollar deposit interest rates to attract more capital. The average dollar deposit interest rate has climbed to above four percent per annum.
The dong/dollar rate on the black market has not decreased dramatically, with the dollar price remaining around 19,500 dong per dollar. Financial analysts predict that the foreign currency market will not be stabilized overnight and that it will take time for measures to have an impact.