Vietnam will aim to keep currency stable
Vietnam's central bank wants to keep fluctuations in the dong to a minimum for the rest of this year, seeing its present value against the dollar as realistic, a local newspaper reported on Thursday.
"In the event that the State Bank sees the necessity to adjust the exchange rate, we will adjust the rate by no more than 1 percent between now and the end of the year," Governor Nguyen Van Binh told the Saigon Times Online newspaper (www.thesaigontimes.vn).
"The State Bank may even allow the dong to strengthen slightly," Binh said in an interview with the newspaper after his promotion to the post last week by the National Assembly.
Vietnam devalued the dong in February by 8.5 percent against the dollar and the currency has found some stability since then.
Binh said the devaluation had placed the dong's real value "on a par" with the dollar. He did not elaborate.
He said signs of speculation had emerged in the gold and interbank markets that have made the foreign exchange rate fluctuate between 100 and 200 dong per dollar a day.
The dollar stood at around 20,824 dong on Thursday compared with 20,890 in February 12, just after the devaluation.
"When there are problems with demand and supply, the State Bank will intervene by selling the foreign currency," he said.
"Our foreign exchange reserves at this moment allow us to intervene at the necessary level," he added.
Binh gave no details on the level of foreign exchange reserves, which are not published in Vietnam. The government said in July it had added nearly $4 billion this year to reserves but did not specify an overall level.
Binh said the central bank was drafting new regulations on gold, and in future companies would need its authorisation to export the precious metal. At the moment they can export gold freely and firms have shipped 40 tonnes recently, Binh said.
The central bank also regulates gold imports tightly to help hold down Vietnam's big trade deficit.
On Tuesday, it said it had approved 5 tonnes of gold imports and could double the quantity to stabilise the market as surging prices for the metal have sparked a frenzy at gold dealers and jewelers.
Binh said the central bank estimated individuals were holding between 300 and 500 tonnes of gold. Vietnamese like to hold gold as a hedge against inflation and the country is one of the world's leading gold importers.
Reuters - August 13, 2011