An employee counts U.S. banknotes at a bank in Ho Chi Minh City. Photo by VnExpress/Thanh Tung
The State Bank of Vietnam on Friday began selling its U.S. dollar to commercial banks to reduce pressure on the currency.
Banks in need or those with a net negative foreign currency reserve can buy the dollar from the central bank at a rate of VND25,450, Pham Chi Quang, head of the currency policy department under the SBV, said Friday.
“This is a very strong intervention to help increase supply and ensure the flow of foreign currency transactions.”
The decision of the central bank came as the dollar has been strengthening against the dong in recent weeks and repeatedly climbed to new heights.
Vietcombank sold the dollar at VND25,473 Friday afternoon, up 5% from the beginning of the year and a new historic peak.
Vietnam’s foreign exchange reserves reached $100 billion by the end of last year, SBV Deputy Governor Dao Minh Tu said at a press briefing earlier this month.
Quang explained that the rise of the U.S. dollar is attributed to persistent high inflation in the U.S. and the Federal Reserve’s decision to maintain its interest rate, contrary to investors’ expectations for a rapid reduction.
Domestically, there is a significant demand among businesses for the U.S. dollar for importing goods like steel. Some are opting to buy the dollar now to mitigate potential future risks.
Although the U.S. dollar has strengthened, its appreciation against the Vietnamese dong remains less than that against the currencies of other regional countries like Thailand (7.5%), South Korea (8.3%), and Japan (9.4%).
The SBV has committed to ongoing monitoring of the exchange rate and to intervening as needed.
