Illustrative image. (Source: VNA)Vietnam's currency, the dong, has strengthened against the US dollar this week after the central bank's recent regulations on tightening foreign currency transactions.
Commercial banks have started to adjust the exchange rate since early this week many days after keeping a cap on 22,547 VND regulated by the central bank on August 19.
The rates quoted by commercial banks have reduced by roughly 70 VND to 90 VND for the past three days.
After reduction on October 5 and 6, Vietcombank on October 7 continuously cut the rate by 20 VND against the previous day, quoting the buying/selling rates at 22,340/22,430 VND.
Vietinbank also cut the rate by 20 VND, listing it at 22,380/22,440 VND.
BIDV and ACB also listed at 22,370/22,430 VND, down 20 VND against the previous day.
The buying/selling rates at Techcombank were 22,355/22,455 VND, down 25 VND and 5 VND, respectively.
It was the first time since the central bank's devaluation of the dong against the dollar on August 19 the rate quoted at commercial banks was lower than the 22,475 VND rate listed at the State Bank of Vietnam's Operations Centre.
Industry insiders attributed the reduction to the application of new regulations taken by the central bank on avoiding the dollar speculation and hoarding in the economy.
According to Circular No15/2015/TT-NHNN on foreign currency transactions by credit institutions, which took effect on Monday, foreign currency transactions with banks must be accompanied by documents proving the purpose, amount and duration of payments.
The circular also states that if customers needed to settle with partners within two working days, banks can sell foreign currencies immediately.
When the payment term is more than three days, banks are only allowed to sell forward exchange. For forward exchange transactions, the maximum term is 365 days.
Previously, the central bank had also issued a decision on cutting the interest rate ceiling on dollar deposits to encourage the conversion of dollar deposits into dong deposits.
Under the decision, the interest rate ceiling on dollar deposits offered by commercial banks to organisations and companies was cut from 0.25 percent to zero percent per year, while the rate for individuals was reduced from 0.75 percent to 0.25 percent per year.-VNA
