Vietnam interbank forex market quiet on first day

Vietnam interbank forex market quiet on first day

HANOI (Reuter): The first day of Vietnam's new foreign currency interbank market on Saturday was quiet, with no transactions conducted while traders got used to the idea.

"The commercial banks are just pricking up their ears. There was no selling or buying," an official of the central State Bank of Vietnam told Reuters.

The attitude of members would be "wait and see" for the first few days because Vietnamese banks lacked experience in trading currencies and foreign banks would not want to take risks, the official said.

"The (Vietnamese) commercial banks do not have the habit of balancing supply and demand within their own internal networks...," the official said.

Foreign bank branches were newcomers in Vietnam, and this limited their competitiveness because they were just getting used to operating here, the official added.

The State Bank launched the market on Friday with a total of 25 banks participating, including eight of the nine foreign bank branches in Vietnam and two of the three joint venture banks.

The two missing banks were the French bank Indosuez and the Vietnamese-Malaysian joint venture VID-Public Bank.

Trading will initially be in the Vietnamese currency, the dong, and the U.S. dollar. Any other currency sought or offered will first be changed into a dollar equivalent, officials said.

The interbank foreign currency market follows creation of an interbank dong market last year.

They are the first in a series of markets planned by Vietnam over the next few years. A national stock exchange, dealing at first in government bonds, is planned for 1995.