VietNam Business: dollar

Showing posts with label dollar. Show all posts

Tuesday, February 22, 2011

Dollar rises to record vs dong on unofficial market

HCMC – The U.S. dollar surged to a new record high of VND20,000 per dollar on the unofficial market on Tuesday and as a result businesses are seeking to hold on to the greenback for fear of foreign exchange risk.

The dollar on the underground market on Tuesday afternoon traded at VND19,980 for buying and VND20,020 for selling, up VND50 from the previous day and VND170 from late last week.

Reportedly rumors that the central bank would continue devaluing the Vietnam dong were behind the dollar rally on the unofficial market on Monday. However, the central bank governor, Nguyen Van Giau, on Tuesday affirmed in Saigon Giai Phong newspaper that there would be no more dong devaluation but his message did not appease the market.

The central bank has yet to take a single move to ease the dollar fervor. Commercial banks on Tuesday quoted the dollar selling price at VND19,500 per dollar although no companies could buy the dollar at that price.

Corporate clients must now pay extra fees to buy dollars at banks, virtually appreciating the dollar versus the dong.

There are no official reasons for the dollar jump but market watchers said shaky confidence in the local currency had led to volatility on the foreign exchange market, so any rumors could drive the dong down.

When the dong fell to VND20,000 per dollar, the dollar price in futures contracts on Asian markets on Tuesday afternoon was VND19,950 for one month and VND21,520 for one year.

There are signs that enterprises are holding on to dollar funds on their bank accounts. A source from the State-owned bank BIDV told the Daily BIDV’s dollar purchases had dipped strongly recently, because corporate customers declined to sell.

Individuals are also speculating on the dollar, the source said.

According to a report by the central bank’s HCMC Branch by late August, dollar purchases from enterprises accounted for 40% of the city-based banks’ total.

If enterprises had sold the dollar to banks last week, it would have lost VND500 for each dollar. Therefore, no one wants to sell dollars to banks given the continued price increase of the dollar on the unofficial market, the source said.

Meanwhile, companies having dollar debt are rushing to buy dollars for premature payment.

Outstanding dollar loans rose sharply in the first nine months of this year, and in HCMC alone, dollar credit expanded by a whopping 36.4%.

Dollar supply is in decline while dollar demand is sharply up, leading to a sudden imbalance on the foreign exchange market, the source said. However, the source affirmed BIDV could meet all legitimate corporate needs for dollars.

Meanwhile, the general director of a joint-stock bank told the Daily that dollar funds were ample but prohibitively high prices really mattered.

Bank denies new rumours of devaluation

The State Bank of Vietnam is not planning any adjustments to foreign
exchange rates, State Bank Governor Nguyen Van Giau said on Oct. 19 in
Hanoi .

The statement was made to the public in an effort to ease speculative
rumours that the Vietnamese dong might be further devalued – rumours
which had driven the black market price for a US dollar on Oct. 19 to
20,030-20,050 VND, up 150 VND over Octoner 18’s rate.

On
the non-deliverable forward (NDF) market on Oct.19 – a currency futures
market – the US dollar was expected to rise to 19,948.99 VND by next
month, 20,279 VND in three months,20,749.540 VND in six months and
21,520.76 VND by October of next year.

Rumours have also
begun circulating that the interbank rate – the rate at which banks
trade currencies amongst themselves – has already risen as high as
19,870-19,990 VND per dollar, although the official rate set by the
centre bank remains at 18,932 VND per dollar.

Commercial banks are meanwhile quoting nominal sell prices of 19,500 VND per dollar.

The deputy head of the State Bank's HCM City branch, Nguyen Hoang
Minh, said that the central bank has worked with relevant agencies to
establish hot lines to monitor the forex market and stamp out
speculative business practices.

The State Bank also
reaffirmed that it will penalise banks that sell the dollar at prices
higher than the official ceiling rate.

But, Minh noted,
the HCM City branch has not yet caculated practical demand for the
dollar in October, and that market inspections are difficult because of
limited human resources.

A senior central bank official
who asked to remain anonymous commented, "The sudden appreciation of the
greenback has resulted from rising global gold prices and dollar
accomodation. Some enterprises which have revenue in US dollars are also
keeping the dollars in accounts and not selling them back to the banks.

"However, there is a postive balance in the dollar supply in the banking system of 250-300 million USD." ./.

Monday, February 21, 2011

Gold slips VND500,000 from all-time high, dollar keeps rising

Local gold prices Wednesday slid about VND500,000 off the all-time high to VND32.8-32.9 million, while dollar prices kept pushing forward to VND20,100 in the black market.

Ho Chi Minh City’s SJC bullion was listed at VND32.8 million a tael and VND32.9 million a tael for bid and ask respectively, down VND70,000 a tael from opening prices. A tael is equal to 37.5 grams or 1.2 troy ounces.

Local gold trading was lackluster this morning as investors stayed on the sidelines on price volatility. Bid and ask spread were mostly narrowed to VND100,000 a tael to encourage profit-taking.

In Asia trade this morning, spot gold was flat at $1,336 an ounce. It fell to a two-week low of $1,334.45 on Tuesday, compared to an all-time high of $1,387.10 hit last week.

In the local forex market, dollar bid and ask prices at gold shops rallied to VND20,000 and VND20,050. But Vietcombank’s dollar bid and ask were unchanged at VND19,490 and VND19,500 respectively.

In the global market, the dollar soared at the news that China central bank raised the lending interest rate by 0.025 percent to curb inflation and cooling off the overheating realty market, and held steady on Wednesday morning as investors poised to cut short positions.

Vietnam central bank governor on Tuesday ruled out the rumors of another dong devaluation, adding that the central bank will likely take actions to improve the liquidity in the market in the coming time.

Gold slips VND500,000 from all-time high, dollar keeps rising

Local gold prices Wednesday slid about VND500,000 off the all-time high to VND32.8-32.9 million, while dollar prices kept pushing forward to VND20,100 in the black market.

Local gold trading was lackluster this morning as investors stayed on the sidelines on price volatility. Bid and ask spread were mostly narrowed to VND100,000 a tael to encourage profit-taking.

In Asia trade this morning, spot gold was flat at $1,336 an ounce. It fell to a two-week low of $1,334.45 on Tuesday, compared to an all-time high of $1,387.10 hit last week.

In the local forex market, dollar bid and ask prices at gold shops rallied to VND20,000 and VND20,050. But Vietcombank’s dollar bid and ask were unchanged at VND19,490 and VND19,500 respectively.

Friday, February 18, 2011

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.

Tuesday, February 15, 2011

Asian markets slip as Bernanke fails to lift sentiment

Photo: Reuters

HONG KONG - Asian stocks fell Monday as traders were underwhelmed by the US Federal Reserve's strongest indication yet that it will inject cash into the economy.

The dollar edged down towards last week's 15-year low on the expected US pump-priming measures, while dealers also looked ahead to a meeting of G20 finance ministers to be held in South Korea at the weekend.

Hong Kong lost 1.21 percent, or 288.25 points, to end at 23,469.38 and Sydney ended down 0.79 percent, or 37.1 points, at 4,651.9.

Tokyo closed 1.76 points lower at 9,498.49 and Seoul slipped 1.41 percent, or 26.87 points, to 1,875.42.

Shanghai gave up 0.54 percent, or 15.93 points, to finish at 2,955.23.

Markets got an anemic lead from Wall Street, where the Dow edged down 0.29 percent on Friday despite Fed chairman Ben Bernanke saying the central bank was ready to take steps to boost the economy.

Bernanke said the current inflation rate was too low and raised the specter of deflation, which would send prices and wages spiraling downwards and force firms to the wall. Unemployment is already sky-high in the United States, with one in 10 people out of work.

"The risk of deflation is higher than desirable," he said.

The Fed was "prepared to provide additional accommodation if needed to support the economic recovery and to return inflation over time to levels consistent with our mandate".

Bernanke's comments raised already elevated expectations that the Fed is ready to pump billions into the financial system, in what is known as quantitative easing, effectively printing money.

However, IG Markets strategist Ben Potter said: "US leads were fairly mixed in terms of economic data and Bernanke didn't shed too much light."

"He sounded a bit cautious, so the market's thinking perhaps he will do any quantitative easing in smaller chunks," he told Dow Jones Newswires.

The dollar edged down in Tokyo trade. It was quoted at 81.15 yen, slipping from 81.44 yen in New York late Friday and heading towards last week's 15-year-low of 80.88 yen.

The Australian dollar was sitting at 98.33 US cents in European trade after it reached parity for the first time last week.

Profit-taking saw the Aussie dip back Monday after it peaked at $1.003 late Friday, the first time it has reached US parity since it was floated in December 1983.

The euro bought $1.3883 in Tokyo afternoon trade, down from $1.3973 dollars in New York late Friday. The European single currency briefly shot up to $1.4159, its highest since January 26, in New York.

The yen's gains have been capped by Japanese authorities' threats to intervene in the currency markets for a second time in just over a month.

Tokyo stepped into the markets for the first time in six years on September 15, selling the yen in a bid to shore up the country's key export sector.

"The dollar is drawing buy-backs against the euro and Australian dollar," said Tsunemasa Tsukada, chief manager at the currency sales desk of Mitsubishi UFJ Trust and Banking.

"I believe the longer-term trend is a weak dollar but some adjustment moves (on the dollar's recent plunge) are going on," Tsukada said.

The possibility of intervention comes amid growing fears of a currency war in which nations weaken their units to bolster their exporters and in turn give a much-needed boost to their economies.

The International Monetary Fund was holding a meeting with central bank officials from around the world to discuss the issue and try to plot a course for sustainable global recovery.

The meeting, hosted by the People's Bank of China in Shanghai, comes ahead of this week's Group of 20 meeting in South Korea, where currency reform is expected to dominate talks.

On oil markets New York's main contract, light sweet crude for November delivery eased 51 cents to $80.74 a barrel and Brent North Sea crude for December was 60 cents lower at $81.85 a barrel.

Gold closed at $1,356.00-$1,357.00 an ounce in Hong Kong, down from Friday's close of $1,378.50-$1,379.50.

Asian markets slip as Bernanke fails to lift sentiment