Greenbacks starting to be offloaded

March 02, 2011 | 15:00

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Greenback sales are bustling on the domestic market for the first time since the local currency was devalued against the US dollar.

illustration photo

Today the free market witnessed an exchange rate decrease to VND21,400 for buying US dollars and VND21,500 a dollar for orders, a 800 point decrease in comparison with the exchange rate a week ago.

The main reason was the increasing dollar supply from enterprises and individuals and those selling their dollars after the government announced new policies on limiting dollar credit.

State Bank deputy governor Tran Minh Tuan said dollar loans would not be encouraged once local banks had raised dollar deposit interest rates to boost their dollar credit.

“The race to increase dollar deposit interest rates negatively affected Vietnam dong deposit interest rates, thus the central bank will apply measures on limiting dollar credit,” said Tuan.

The 5-6 per cent per year dollar deposit interest rates and psychological expectation of further dong devaluations have encouraged local residents to keep dollars instead of dong.

Nguyen Hoang Minh, deputy director of the Ho Chi Minh City’s State Bank branch, said local banks’ total dollar deposits in the city were valued at around $10 billion, accounting for a quarter of total deposits in the city.

The year-on-year dollar deposit growth rate in February was 53.3 per cent, doubling that of January’s.

Meanwhile, dollar credit was also valued at around $9.5 billion, accounting for 27.2 per cent of total credit in the city, a year-on-year increase of 79 per cent in February.

By Van Ngoc

vir.com.vn

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