Forex rate goes up 1 pc

illustration photo

With the one per cent adjustment, the ceiling forex rate is thus set at VND21,673 per USD and the floor forex rate is at VND21,243 per USD.

According to SBV, the exchange rate adjustment is to implement the government's Resolution No.01 outlining tasks and solutions to carry out the plan for socio-economic development and the state budget in 2015.

SBV is responsible for monitoring monetary policy proactively and flexibly in close conjunction with fiscal policy to actively control inflation in line with the targets, thus ensuring stable macro-economic and economic growth, monitoring forex rates appropriate to developments of macro-economic, inflation and currency market.

In 2014, despite the fluctuations in the international financial market, the domestic forex rate and foreign currency market were rather stable, the inter-bank’s average forex rate rose only one per cent and the market operated smoothly. Additionally, individual and corporate demand of forex currencies was fully and promptly met by credit organisations. SBV also achieved a third consecutive year of success in keeping its forex volatility control, which helped in regaining investor confidence in the VND.

After more than six months of maintaining the inter-bank’s average forex rate stable at VND21,246 per USD, SBV has taken the initiative to adjust the forex rate with another one per cent.

“This adjustment is to actively lead the market, in line with developments in both international and domestic financial markets, and create a solid stability for the forex market,” said one of SBV’s leaders. SBV will ensure uniform implementation of measures and policy tools to stabilise the forex rate and foreign currency market on the new price level, the source added.

In late May 2014, the forex market encountered the first sign of strong fluctuation. Following, SBV increased the inter-bank forex rate to VND21,246 from VND21,036 per USD earlier on, equivalent to a one-per-cent adjustment rate. SBV applied the USD rate’s ceiling at VND21,458 per USD ever since with one per cent margin and commercial banks can trade as much as one per cent either side of the rate.

During the past three months, the USD against the VND boosted robustly and at some points, reached as high as VND21,600 in the black market.

Late December 2014, SBV Governor Nguyen Van Binh at a banking conference stated that the VND would not be devalued by more than two per cent in 2015.

Dinh Duc Quang, OCB deputy general director analysed that SBV would closely monitor the market, based on the forex demand and supply. If in the first quarter this year, the supply of foreign currency from overseas remittances and export activities is abundant, SBV may let the market monitor the forex rate itself. However, if the supply of foreign currency is insufficient, the SBV will adjust the forex rate accordingly.