Importers hit as banks slap fees on dollar sales

Banks are demanding additional fees to sell dollars that take official rates almost to black-market levels, causing importers anguish.

Many complain that they are forced to pay VND19,850 - VND19,900 for a dollar while the official rate is only VND19,500.

A Ho Chi Minh City-based fashion firm owner told Tuoi Tre she plans to buy $1 million to pay for imports during the year-end peak season, but would have to pay service fees of VND400 million (US$20,500), meaning the actual dollar rate will be VND19,900 and not VND19,500.

A paper importer said he will lose some VND2.8 billion on a consignment worth $7 million this month.

Asked about the fees, several banks explained they buy dollars from exporters at negotiated prices that are quite close to black-market rates due to the dollar shortage. They earn just VND5-VND10 per dollar, they claimed.

In what is a double whammy for buyers, banks do not issue invoices for the fee. “If there are no invoices, the fees will be treated as profits and taxed,” a director of a paper import company said.

It is unclear where Vietnam will get its dollars in the remaining months this year, Lao Dong (Labor) newspaper said.

It ruled out gold exports as a source saying the country recently began to import three tons of the precious metal to meet surging demand.

Around 56 tons were exported in the first eight months for $2 billion.

Mounting demand for the greenback to repay loans that will fall due at the peak year-end season is also expected to put pressure on the dollar rate.

The Ministry of Planning and Investment forecasts the trade deficit to reach $10.1billion this year.

The Asian Development Bank revealed last Friday that Vietnam’s forex reserves are enough for eight weeks’ imports, adding that they may not rise by much in the last quarter.

The country’s traditional sources like foreign direct investment, portfolio investment, and overseas remittances have not seen robust growth, the newspaper added.

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Vietnam needs to heed black market, official rate gap, ADB says

Vietnam should pay attention to the “widening” gap between black market and official exchange rates, which can be considered a barometer of investor confidence, according to the Asian Development Bank.

“We certainly need to keep watching,” Ayumi Konishi, the ADB’s country director for Vietnam, said at a press conference in Hanoi. The “trend certainly reflects people’s expectations.”

Vietnam’s dong is about 1.8 percent cheaper to buy in the black market than the official rate paid by banks and devaluations are likely in 2011 to bring the exchange rate into line, Credit Agricole CIB said in an Oct. 11 research note.

While other Asian countries like China or Thailand are worried about appreciation, the concern in Vietnam is “sharp devaluation rather than any gradual adjustment in the value of the dong,” said Jayant Menon, an economist in the Office of Regional Economic Integration at the Manila-based ADB.

The dong traded between 19,830 and 19,870 per dollar at money changers in Ho Chi Minh City on Friday afternoon, according to a telephone information service run by state-owned Vietnam Posts & Telecommunications. The rate in the interbank market was 19,499, the weakest level since at least 1993, according to data compiled by Bloomberg.

The State Bank of Vietnam fixed the reference rate at 18,932 on Friday, a level unchanged since Aug. 18. The currency is allowed to fluctuate up to 3 percent on either side of the rate, which means it can be traded at low as 19,500.

“Vietnam is running a trade deficit so some sort of controlled depreciation of the currency to improve competitiveness is not a bad idea,” Menon told reporters after the conference. “The concern is sudden sharp, erratic falls in the value of the dong, caused by lack of confidence.”

Vietnam’s cumulative trade deficit in the first nine months reached $8.58 billion, according to the General Statistics Office. For September alone, the gap rose to $1.05 billion from $395 million in August.

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