Vietnam dollar demand to surge in second half: official

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There will be rising pressure on dollar supply later this year as demand for the greenback is expected to surge sharply as businesses begin to repay dollar loans, an official said.

Dollar loans expanded 17.07 percent in the first four months this year, compared with only 2 percent growth in dong loans, Le Xuan Nghia, vice chairman of the National Financial Supervisory Commission, told Thanh Nien.

Businesses have been borrowing a huge amount of dollars from banks and they will drive demand for the currency up in the third and final quarters when the loans mature, Nghia said.

The dollar-dong exchange rate will rise and there will be waves on the currency market, he said.

Nguyen Manh, Bank for Investment and Development of Vietnam's treasury head, said the exchange rate will go up soon.

Many firms sold their dollar loans, boosting dollar supply on the market but this trend will be reversed when they start repaying the loans, he said. "In general the exchange rate will be put under high pressure."

An expert told Thanh Nien as interest rates for dollar loans in the first quarter were 8-9 percentage points lower than dong lending rates, many local companies decided to switch to short term dollar loans.

Most loans are short term, ranging from three to six months, so it's already time for some loans to be repaid, the expert said.

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