Will fewer Vietnamese hoard dollars as the price drops?

  • October 30, 2015

VietNamNet Bridge - The State Bank’s policies on the dollar have influenced consumers, many of whom are  not saving gold to preserve their assets. However, they continue to hold dollars.

Vietnam, dollar, gold market, SBV

The dollar price went down immediately after Circular No 15 on the management of foreign currency transactions took effect on October 5.

On the first three days after the circular took effect, the dollar price decreased from VND22,500 per dollar to VND22,410 per dollar. 

On the fourth day, October 8, it dropped to VND22,200 per dollar. At some moments, the dollar was offered in the interbank market at just VND22,150 per dollar. 

The forex trading division of a bank revealed it could buy dollars at VND22,175 per dollar.

The downward tendency on that day prompted some small banks to stop buying foreign currencies from exporters to listen to the news. Just one day before the decision was made, the bank bought dollars at VND22,350-22,360 per dollar and suffered losses as the dollar price decreased the next day.

A bank officer revealed that the bank could buy millions of dollar worth of foreign currencies from individual clients on that day. 

“This was for the first time in many years we could buy such a large amount of hard currencies from the black market within one day,” he said.

However, the dollar price went up again on October 9 as the sale from big banks shrank. Commercial banks quoted the selling dollar price at VND22,290 per dollar. Some banks hurried to buy dollars after they sold days before.

On October 14, the prices quoted by commercial banks climbed to VND22,460 per dollar, which was nearly as high as the price on days before Circular No 15 took effect.

Vietnamese won’t get rid of dollars

Hoarding gold and ‘dollarization’ are two of the biggest problems of the national economy. People like keeping gold and dollars instead of the dong to preserve their assets, because they saw the dong depreciating. 

Therefore, the State Bank vowed it would apply necessary measures. It has succeeded: people are fed up with gold and are not trying to hoard gold anymore. However, Vietnamese are not expected to give up dollars like they gave up gold, because the hard currency still plays an important role in international payment and in Vietnam. 

Businesses need dollars to make payments for imports. Vietnamese also use dollars traveling, studying abroad or for healthcare.



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