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.