Surging demand puts fire under the dollar

Customers gather at a money changer's shop on Hang Bac street in Ha Noi to buy and sell US dollars. In the last few days, the cost of US dollars has shot up. — VNA/VNS Photo Tran Viet

HA NOI — The US dollar has suddenly appreciated against the Vietnamese dong by 0.49 per cent for the last seven days on the banking market, which is said to take root from real demand of business and worries about the exchange rate in the latter part of the year.

The interbank rate yesterday unchanged at VND18,544 per dollar. The selling exchange at banks was popularly quoted at VND19,100 per dollar - the upper line of the minus/plus 3 per cent daily trading band, which may imply a big demand on the dollar.

"Some enterprises want to buy the dollar to prepare for the big demand by the year-end when many contracts come to due," Deputy General Director of Asia Commercial Bank (ACB) Nguyen Thanh Toai told Viet Nam News. "I think that is real demand, not speculative business."

The demand for dollars typically rise in the second and third quarter of each year as enterprises need dollars to pay for matured contracts, imported raw material, consumer products to meet rising demands at the end of the year.

Sharing the same idea, Deputy General Director of Vietcombank Pham Quang Dung told Viet Nam News: "Exchange rate is similar to other economic factors, sometimes up, sometimes down caused by the supply and demand on the market."

"The increase is not unusual. It is just because of the growing demand. US dollar deposit from enterprises and civil groups are good and other dollar sources to buy are still stable," Dung added.

The latest central bank's statistics released to public early this week also proved these ideas, saying commercial banks now had about US$600 million in idle capital on hand to exchange with the central bank.

Yesterday, central bank Governor Nguyen Van Giau was not available for further comment on a phone interview. However, earlier this week, to ally these concerns, earlier this week, the State Bank of Viet Nam announced to ensure sufficient US dollar supplies and their ability to meet business demands.

The head of the State Bank of Viet Nam's foreign exchange management department director Nguyen Quang Huy noted that some key dollar sources, like remittances from abroad, foreign investment and tourism grew in the first half of the year and remittances were expected to total $3.6 billion by the end of this month. The exchange on the black market followed the up-trend to reach VND19,100-19,120 per dollar yesterday, from VND18,930-18,950 per dollar last week. —VNS