Clearing up the Black Market exchange

VIR finds out more from Nguyen Hoang Minh, deputy governor of the State Bank of Vietnam’s Ho Chi Minh City branch

According to recent reports the State Bank will control illegal foreign currency exchange and sanction the listing of goods in foreign currency. Can you tell us more?

Last year, the State Bank’s Ho Chi Minh City branch in association with Ho Chi Minh City police detected 37 cases where foreign currency was being exchanged illegally and prices were being listed in dollars. Of these, 36 cases were sanctioned with over VND2 billion ($100,000) worth in total fines. We also cooperated with Ho Chi Minh City market watchdog to detect 16 violated cases with over VND400 million ($20,000) in fines.

Besides, the Ho Chi Minh City branch of the State Bank examined transactions, payments, price quotations and long-term real estate leasing contracts at three firms- the Phu My Hung Corporation, the Hoang Quan Real Estate Consulting-Trading-Service Company Limited and the Hoang Anh Gia Lai Housing Development Joint Stock Company. We had detected two violations.

How many foreign currency exchange dealers are actually licenced in Ho Chi MinhCity? How much is the total turnover of foreign currency exchange through dealers?

There were a total 76 foreign currency exchange dealers at tourist destinations in Ho Chi Minh City by late 2010. According to statistics, foreign exchange turnover of credit institutions and economic organisations in 2010 hit $950 million, down 14.73 per cent year-on-year.

The exchange rate on the black market recently dropped slightly but it is still much higher than the bank’s rate. What measures can help the State Bank to intervene?

The Vietnam dong-US dollar exchange rate on the black market has jumped partly due to escalating gold prices. Therefore, to stabilise the gold market and ease the high exchange rate on the black market, the State Bank granted quotas allowing some firms and banks to import gold.

However, as the Lunar New Year approaches, demand of foreign currency for payment is on the rise, so I personally think that the State Bank should introduce effective measures to intervene with the foreign currency market. The State Bank may extend the list of firms that were permitted to buy foreign currency from commercial banks or the State Bank may give a priority to selling dollar to firms, which import essential commodities.