Vietnam central bank again turns screw on forex market

By T. Xuan, Thanh Nien News

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An employee counts Vietnamese dong bank-notes near U.S. dollar bank-notes at a bank in Hanoi. Photo: Reuters An employee counts Vietnamese dong bank-notes near U.S. dollar bank-notes at a bank in Hanoi. Photo: Reuters

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In yet another effort to prevent speculation in the US dollar, Vietnam's central bank has announced it will issue a dong-dollar reference exchange rate every day, starting Monday, when it was set at VND21,896.
Earlier the reference rate rarely changed.
The new rate would be based not only local supply and demand, but also happenings in the foreign exchange markets of countries that do business or have loan agreements with Vietnam, the State Bank of Vietnam said in a statement.
Banks are allowed to trade the greenback within 3 percent above or below the reference rate. State giant Vietcombank sold the dollar at VND22,540 Monday.
The central bank said the new policy would allow it to strengthen the dong, which saw a 5.1-percent decline last year following three devaluations. It is also expected to help stabilize exchange rates and the foreign exchange market.
Soon after the US Federal Reserve raised the range of its benchmark interest rate to 0.25-0.50 percent last month, the SBV abolished interest on dollar deposits by individuals.
The move, which it said was an attempt to prevent dollar hoarding, came less than three months after it cut the ceiling rate from 0.75 percent to 0.25 percent.
In another tentative plan, SBV governor Nguyen Van Binh recently told the media that banks are likely to be instructed to charge a fee for keeping dollar deposits.

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