We should try to find a price which is both accepted by dollar buyers and sellers, Ngan told Tuoi Tre, adding that the current fixed forex rate which is listed by banks will prevent the people from neither selling the greenbacks to banks whenever they have nor buying it from banks whenever they need it.

Among many foreign currencies, the price of the US dollar is regulated by the central bank in order to stabilise macro-economy, and so, it is often lower than that in the black market.

As a result, even though the law asks people to sell it to banks whenever they are supplied from foreign sources, they will not do so if the bank's buying prices is lower than that in the black market.

Since they don't accept such a price, exporters won't sell the greenbacks to banks but hoard it, expecting the price to hike to sell to the better bidding banks, while the people who receive it as overseas remittances also choose to either hoard it or sell to the black market for higher prices.

In the past, around $8 billion overseas remittances have been channeled to Vietnam, but most receivers deposited them, hoarded them or sold them to the black market.

So, this has been pushing banks to a tight corner in which they don't have enough dollars for their own demand and lending to importers, let alone selling to individuals who need it for travelling abroad.

Answering the question of Tuoi Tre's reporter regarding the mechanism of negotiable forex rate that have once been applied at Vietnam Eximbank, Ngan said it is one solution. The mechanism allows banks to operate as the middleman to negotiate the dollar buying price between the sellers and buyers.

The central bank should allow banks to buy dollars from recipients of overseas remittances at around 2 percent, or 400 dong, higher than the official forex rate so that some billions of US dollars can be rechanneled to bank and thus, the dollar thirst for importers can be quenched.

If this is realised, recipients of overseas remittances will choose to sell the greenback to banks rather than selling it to the black market illegally.

No dollar to find

Answering the question about banks' attitude toward selling the greenback to individual buyers who are about to travel abroad, Ngan said banks should not reject people's demand to buy the greenback even if their destinations are not the US.

Banks should act as advisors to give them clear explanations on the matter so that people will buy native foreign currencies instead of the greenback.

People who travel abroad tend to buy the greenback at a maximum rate allotted by the central bank, i.e $7,000 each. Since this is not a small amount, banks often refuse to sell without clear explanation or advice.

As reported by Tuoi Tre, Hien in HCM City's Phu Nhuan District failed to obtain any dollar after visiting seven banks around the city. He badly needed $700 to travel abroad.

Nguyen Minh Hoang, deputy director of the central bank's HCM City branch told Tuoi Tre he would propose solutions to the governor.

Tuoi Tre - March 15, 2011