State Bank eases dong/dollar rate (27/12)
06/08/2010 - 29 Lượt xem
The daily trading range on the dollar/dong exchange rate was widened on Monday from 0.5 per cent to 0.75 per cent, a move intended to slightly loosen the dong’s peg to the US dollar and reduce the pressure of the money supply on inflation.
The central bank last widened the daily trading band on December 31, 2006, from 0.25 per cent to 0.5 per cent above or below the inter-bank exchange rate.
With the dollar plunging against world currencies in recent months, the tight trading band has kept the dong artificially weakened and lessened liquidity on forex markets.
"The new band is rather wide. It’s really good news for us as we can offer more flexible exchange rates," said Nguyen Thanh Ha of Vietcombank.
Vietcombank yesterday quoted buy/sell rates against the US dollar at VND16,000/16,051. The greenback ended last year at VND16,051.
Policymakers have faced "a dilemma, with trade deficits growing and inflation picking up," Masashi Kurabe, head of the foreign exchange sales and trading group of the Bank of Tokyo-Mitsubishi UFJ Ltd, told Bloomberg in Hong Kong on Monday.
Viet Nam’s General Statistics Office (GSO) on Monday reported a trade deficit of $12.4 billion for 2007, much higher from $4.8 billion last year. Meanwhile, the GSO yesterday reported that consumer prices in December had surged an unexpected 12.63 per cent year-on-year, a 10-year high.
A looser exchange rate was expected to help monetary management and to protect the overheating economy from strong capital infows from offshore which currently were putting pressure on the dong, said Nguyen Dinh Cung, senior economist with the Central Institute for Economic Management.
"It’s a welcome step by the central bank to help curb inflation. But forex is only a part of the story," said the head of the institute’s Department for Trade Policy and International Economic Integration, Vo Tri Thanh.
Even if the band were to be increased another 25 basis points to 1 per cent, the problem still laid in macro management capacity of the authorities, he added.
