VietNamNet Bridge – The dollar free market has been stagnant for the last several days since management agencies have been applying drastic measures to control the market.  Contrary to previous thoughts, it turns out that it is not so difficult to control the free market.

Foreign exchange dealers do not like… small change

Ha Trung street, the biggest foreign exchange center in Hanoi, has become less crowded and more quiet in the last few days. It is because all the foreign exchange agents on the street have unanimously halted transactions. At noon on March 8, usually the busiest time of the day, all the officers of foreign exchange shops were seen sitting and chatting on the sidewalk and the street. The shops were lit, but there was not a single visitor.

The currency transactions are frozen on the street. Previously, one just needed to call the shops to ask about the dollar price or even negotiate the transaction of large volumes of money of up to tens of thousands of dollars. However, on March 8, no one answered the coming calls, and mobile phones of the owners of the gold and foreign exchange shops were turned off.

It is quite a surprise for Hanoians that the “foreign currency street” in Hanoi has stopped transactions. Why do the foreign exchange agents have to stop transactions if most of them have operation licenses as agents that collect foreign currencies for commercial banks?

The problem that if authorized exchange agents strictly follow the regulations set up by the central bank and commercial banks, they will not make profit. “It will be unprofitable to collect small change. And Hanoi will not need so many foreign exchange agents just to collect small change,” said a man who works for a big agent in Hanoi.

The man said that the situation has become so tense that foreign exchange agents have to stop transactions to listen to the news.  These days management agencies are continuously taking inspection tours to control the transactions at foreign exchange agents. In fact, such tours occurred many times before, but the inspections were not too harsh and did not frighten foreign exchange agents. However, everything is quite different now.

Market control taskforces, banking inspectors and the police have been joining forces to control the transactions at foreign exchange agents. Last week, leaders of the State Bank of Vietnam had a working session with the Ministry of Public Security to discuss what needed to be done to control the free market.

Meanwhile, commercial banks said that their foreign exchange agents have halted transactions because they are listening to the news about performance of the dollar.

A banking expert told VietNamNet’s Vietnam Economic Forum that foreign exchange agents themselves now dare not take on dollars in big quantities, because they cannot anticipate where the dollar price will go.

It’s necessary to remove black market

In fact, many gold shops and foreign exchange shops have operation licenses to work as agents for commercial banks. However, the license is just the “mask” under which they carry out “black market’s transactions”. The foreign exchange shops have big capacity which allows them to trade hundreds or even tens of thousands of dollars at once.

On paper, these foreign exchange shops collect foreign currencies for banks. However, in fact, they do not apply the exchange rates quoted by commercial banks, while they apply the exchange rates set by themselves.

A question has been raised that whether such a network of foreign exchange agents should be allowed to exist. In principle, the agents can act as the “arms” of commercial banks which can help banks to attract more foreign currencies to the banks, especially from tourists. However, analysts say that such a network has become unnecessary when banks themselves have been trying to set up more and more transaction points and branches. Especially, with modern international payment methods, tourists now do not rely much on such networks.

Le Khac