Currency restrictions due to take effect in Vietnam
Currency restrictions due to take effect in Vietnam
HANOI (AFP): The Vietnamese government will introduce strict currency regulations this weekend to back up its decision to restrict the use of foreign currency in the country, reports said yesterday.
Under regulations ordered by Prime Minister Vo Van Kiet, from October 1 all foreign currency earned by companies must be deposited in authorized bank accounts and most of the money will have to be converted into Vietnamese dong.
Businesses which currently charge for their services in U.S. dollars will be forced to accept dong, with only duty-free shops at airports and seaports allowed to take foreign currency.
Nearly 400 new foreign exchange counters will open this weekend, mainly in Hanoi and Ho Chi Minh City, in commercial banks, hotels, airports, business and tourism centers.
They will work round the clock to exchange foreign currency for Vietnamese dong, the newspapers said.
The moves to ban transactions in foreign currency come after Deputy Prime Minister Pham Van Khai told the National Assembly in May that the government wanted to reduce the use of U.S. dollars in the economy to get a tighter grip on monetary policy and inflation.
The measures are also aimed at bringing more money into the banking system to mobilize it for domestic investment, though few believe Vietnam can quickly achieve its aim of ending the use of dollars in the local economy.
According to official reports, dollar and gold prices remained stable this week on markets in Ho Chi Minh City despite the Oct. 1 deadline approaching.
On Thursday afternoon, one U.S. dollar would buy 10,950 dong and the greenback was selling for 11,004 dong by the local Vietcombank, the Vietnam News said. On the black market, the dollar was purchased at 11,000 dong and resold for 11,010 dong in Ho Chi Minh City (11,000-11,020 in Hanoi).
On Tuesday, the price of gold stood at 5.27 million dong (480 USD) per tael, the daily added.
But there is speculation that gold prices may rise as people shift their savings from dollars to gold, a traditional safe haven for savings and easily traded on local markets. These savings are currently estimated at upwards of US$3 billion, in gold or dollars.
The State Bank of Vietnam will launch an interbanking foreign exchange market next month in Hanoi, which should lay the ground for the establishment of a regular stock exchange in the next future.
The central bank said the interbank market is designed to meet demands for foreign currency and facilitate transactions in foreign currency between Vietnamese commercial banks.