USD/VND inter-bank exchange rate edges down

The reference exchange rate on January 29 remains unchanged at 22,858 VND/USD from the previous day.

The final trading week before the beginning of Tet (January 28 2018 - February 1 2019), followed the market trend of previous years in the weeks approaching the holidays, according to Vietnam Economic Times.

The foreign exchange market saw strong transactions converting foreign currencies into VND while the USD/VND exchange rate decreased. In addition, the lending rate soared due to an increased demand for VND during peak days.

On January 28, the State Bank of Vietnam (SBV) suddenly shifted the reference exchange rate to 22,858 VND/USD, a sharp drop of VND22 compared to the final session of last week. The rate on January 29 remained unchanged from the previous day.

The SBV Operations Center has reportedly maintained a USD buying price of VND23,200 since the beginning of the year, which was considered as a rate cap.

Since the beginning of 2019, the prices of USD traded on the inter-bank market and those listed by commercial banks have remained steady whenever the SBV Operations Center maintained or increased the exchange rate cap.

However, on January 28, the USD/VND inter-bank exchange rate broke the cap and decreased to 23,196 VND/USD. Even, USD buying prices in the “free market” reported a lower level than that listed by commercial banks.

With these movements and the improved supply of foreign currency, the SBV is expected to continue its net purchase of foreign currencies in order to increase the nation’s foreign exchange reserves.

In addition, January 28 saw the average inter-bank interest rate into VND jumped by 0.1 - 0.22 percentage points in all loan terms in comparison to the final session of last week. The overnight interest rate inched up to 4.86 per cent per year, 5 per cent per week, and 5.18 per cent per month.

Additionally, the SBV on January 28 made a net injection of VND20.248 trillion (US$885.816 million), bringing the circulating mortgage money flow to VND120.584 trillion (US$5.27 billion).