The US dollar listed at commercial banks has so far this year gained 1.67 per cent against the dong due to a rise in the global market, but supply and demand for the greenback in the domestic market has remained stable.
On Monday, the State Bank of Vietnam (SBV) set the daily reference exchange rate at VND23,259 per dollar, up VND7 from the last working day of the previous week, and the seventh consecutive upward adjustment.
With the current trading band of +/-3 per cent, the ceiling rate applied to commercial banks during the day is VND23,956 per dollar and the floor rate VND22,561 per dollar.
Following the SBV’s move, commercial banks continued to increase the dollar strongly during the day.
Vietcombank listed the buying rate at VND23,340 per dollar, and the selling rate at VND23,530, both up VND35 from the previous session.
BIDV also raised both rates by VND35, listing the buying rate at VND23,370 per dollar and the selling rate at VND23,530 per dollar.
Meanwhile, Techcombank added VND60 to the buying rate, listed the rate at VND23,390 per dollar, and raised the selling rate by VND40 to VND23,550 per dollar.
The daily reference exchange rate followed an upward trend throughout the week ending March 20, gaining a total VND30.
The rates listed at commercial banks also rose remarkably, ending the week by around VND200 higher than those on Monday.
On the unofficial market, the dollar on Monday was traded at some VND250 higher than the rate of commercial banks, nearly reaching the threshold of VND24,000, up VND50 against the previous session.
Despite the rise, supply and demand of the dollar in the domestic market has remained stable.
According to experts, the dollar has gained as fresh declines in stocks accelerated the flight to cash.
SBV affirmed that it was ready to sell foreign currency to ensure forex market stability if necessary.
Pham Thanh Ha, director of the SBV’s Monetary Policy Department, said SBV had the necessary resources, capabilities and instruments to stabilise macro-economic conditions and the monetary market.
Experts also forecast the central bank would try to limit the depreciation of the dong as the country is still stuck on the US’ currency manipulator watchlist.
According to analysts from Fitch Solutions, a strong foreign reserves position should allow the central bank to safeguard the currency against excessive downside volatility to avoid potential punitive measures from the US due to currency manipulation.
“That said, we believe that the SBV will seek to limit the pace of dong weakening as Vietnam remains on the US Treasury’s currency manipulator watchlist,” Fitch analysts said.
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