A stabilized currency market has allowed the State Bank of Vietnam to buy 1.2 billion US dollars in May for its foreign exchange reserves.

A report published on the government website Saturday says the central bank had already made a net purchase of $877 million in the first four months of the year.

As black market transactions have dwindled and the exchange rate has stabilized, the central bank had the opportunity to buy a large amount of dollars for national reserves, the report said, adding that such a move had been impossible from mid-2008 until last month.

“Companies and individuals have started to sell their foreign currency holdings to banks and switch from lending and borrowing dollars to selling and buying with banks,” the report said. It also said that the use of dollars as a means of payment in the country has been reduced.

State Bank Governor Nguyen Van Giau told Thanh Nien early this month that the central bank was able to buy as much as $200 million a day from banks.

The central bank has recently introduced a series of new rules to support the local currency.

On June 2 it lowered the rate cap on dollar deposits by individuals to 2 percent from 3 percent, and cut the limit for institutions to 0.5 percent from 1 percent. Banks have also been ordered to set aside more dollars as reserves.

Starting July, state companies will be required to sell US dollars to commercial banks.