Hanoi - Experts offered different explanations Tuesday for a
widening gap between the official and black-market exchange rates of
the Vietnamese dong.
The dong dropped to 18,070 to the dollar on the black market
Tuesday, while the official benchmark rate stayed at 16,936 to the
dollar. The government allows banks to vary their rates up to 5 per
cent from the official benchmark, so commercial banks were selling
dollars for 17,783 dong.
Nguyen Duc Vinh, chairman of the board of Techcombank, the
fourth-largest commercial bank in Vietnam, said the high black-market
rates reflected companies unable to obtain dollars through official
channels.
'Many people want to borrow dollars from banks, but only people
who follow the regulations of the State Bank of Vietnam can borrow,'
Vinh said. Others were forced to exchange for dollars on the black
market.
But prominent economist Le Dang Doanh said businesses were not
eager to borrow dollars, as Vietnamese imports have slowed
dramatically since last fall. Trinh Duc Minh, director of air
conditioner distributor Ha Minh Tuan Company, agreed.
'The exchange rate between dollars and dong is very volatile now,
so companies do not want to borrow dollars,' Minh said.
Vietnam's economy has performed unexpectedly well in certain
categories over the first quarter of this year. The country ran a
record 1.7-billion-dollar trade surplus, inflation hovered near zero,
and domestic consumption was up 22 per cent year-on-year.
But exports have fallen sharply since last fall, and uncertainty
over the future remains high.
Expectations of future inflation fueled by the government's
1-billion-dollar stimulus package are leading people to buy
black-market dollars as a hedge, said Le Xuan Nghia, deputy
chairman of the National Committee for Financial Supervision.
Nghia also blamed banks' practice of demanding that businesses pay
'transaction costs' when they ask for dollars, a code for obtaining
some of the money through the black market.
'For instance, when an exporter asks to borrow 1 million dollars,
commercial banks say they can only lend 0.7 million dollars,' Nghia
said.
For the other 0.3 million, he said, the banks demand a surcharge
so that they can buy the dollars on the black market and charge a
commission. 'They call it a transaction cost. This is illegal, but it
still exists in practice.'
Economist Tran Duc Nguyen, former head of the Prime Minister's
Research Commission, said he believed foreign investors were
withdrawing money from Vietnam, increasing the demand for dollars.
If the dong continues to fall against the dollar, he said, exports
will recover. But importers will face more difficulties.
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