The State Bank of Viet Nam (SBV) has introduced forward sales of US dollars to commercials banks for the first time this year to better manage the country’s foreign exchange market.
The SBV announced it held forward exchange sales on November 23 and 26 to banks with dollar demands. The forward rate of the dollars, which have a due date on January 31 next year, is VND23,462 per dollar.
The central bank uses forward sales as an instrument to support and guide the market. It helps control the maximum range in which the exchange rate is allowed to fluctuate in a certain period of time.
Forward contracts also make the exchange rate correlate with market expectations and move flexibly in line with domestic and international market developments.
According to experts, with the introduction of forward contracts, the central bank is more proactive in guiding the market and stabilising market psychology in the context that the US Fed is expected to make an interest rate hike in December this year.
The SBV made its first forward exchange sales in December 2015, a few days before its application of the new daily reference exchange rate policy. The move was to realise a commitment by the central bank to ensure dollar supplies to cool the market at that time.
On Monday, the central bank kept the daily reference exchange rate unchanged from last Friday, standing at VND22,743 per dollar.
With the current trading band of +/- 3 per cent, the ceiling rate applied to commercial banks was VND23,424 per dollar and the floor rate VND22,062.
Vietcombank cut both rates by VND20, listing the buying rate at VND23,285 and the selling rate at VND23,375, while BIDV listed the dollar at VND23,280 for buying and VND23,370 for selling, down VND25.
Techcombank also reduced both rates by VND20, listing the buying rate at VND23,265 and the selling rate at VND23,375.