Despite the great efforts by the central bank to make the dollar less attractive in the eyes of people, people still keep dollars out of habit.

The dollar deposit interest rates have been eased to three percent or lower as per request by the State Bank of Vietnam. Meanwhile, the dollar prices in the black market have become higher than the prices quoted by commercial banks.

The dollar price on the black foreign currency market was 20,900-20,970 dong per dollar (sale and purchase). The purchase prices on the black market were 5-10 dong per dollar cheaper than the prices quoted by big commercial banks like Vietcombank, Eximbank and ACB; while the sale prices on the black market were higher by 35 dong per dollar than the official prices… things that are rarely can be seen in Vietnam.

No dollar seller

A Deputy General Director of a big bank remarked that though the bank has raised the dollar purchase price, clients, especially individuals, still do not want to sell dollars to banks.

Asia Commercial Bank (ACB) is now considered the bank which offers the highest dollar purchase prices. Its quoted prices are 5-10 dong per dollar higher than that offered by other banks. However, Dat Viet reported that the bank’s branches still could not find dollar sellers late last week. Most of the clients came to ACB’s branches just to make dollar deposits.

The same situation could be seen at the branches of Dong A, Vietcombank, Techcombank and Eximbank as well.

Though commercial banks have slashed the dollar deposit interest rates to less than three percent (2.7, 2.8 and 2.9 percent per annum), which has made the dollar less attractive, people still prefer making deposits in dollars to converting dollars into Vietnam dong and depositing dong at banks.

K.T, a client whom Dat Viet met at a branch of ACB, said that “she still decided to deposit in dollars, because she believes that it is wiser to keep dollars than other currencies.”

Meanwhile, T.T, a client who came to deposit dollars at Vietcombank last Friday, said, “he needs to keep dollars, because if he sells dollars at this moment, he will not be able to purchase dollars later when he needs them.”

T said, “he had to borrow dollars to build his house in last September, and now he has to collect dollars to pay debts.”

A reasonable dollar pricing mechanism is the key

Nguyen Thi Kim Xuyen, Deputy General Director of Dong A Bank, said “no changes have been seen over the last few days, since banks began applying the ceiling dollar deposit interest rate of three percent as requested by the State Bank.”

“We still cannot see the movement of people rushing to sell dollars to banks, while the volume of dollar deposits has not decreased,” saidXuyen.

Why don’t people still keep dollars and refuse to sell dollars, even though the dollar price on the black market has decreased, and the dollar deposit interest rates have been eased? Le Tham Duong, a banking expert, thinks that the problem with the liquidity remains exists.

Duong states “In order to settle the current problem, it is necessary to set up a reasonable foreign currency pricing mechanism, which can answer the question whether Vietnam will collect fees on foreign currency sales and purchases.”

“In other countries, fees will be imposed when purchasing cash, while no fee will be imposed if people buy via transfer,” Duong said. “The most important thing is that we must turn “fee” into a kind of “additional price”, which may lead to the existence of two kinds of exchange rates”

Dat Viet