Central bank buys $1.3 bln in foreign currencies

The purchase took place November 9-13 and the foreign currencies were acquired from domestic commercial banks, leading brokerage firm Saigon Securities Inc. (SSI) says in its latest report.

Strong export growth in the past 10 months has enabled such a large purchase of foreign currency by the central bank, the report says.

Vietnam Customs had on Tuesday released the adjusted figure for October’s trade surplus at $3 billion, much higher than its October-end estimate of $2.2 billion, helping Vietnam’s 10-month trade surplus reach a record $20 billion.

Having a plentiful supply of foreign currency has helped the SBV continue to acquire more of it, and the nation’s foreign exchange reserves has moved closer to the central bank’s target of $100 billion. Increasing foreign exchange reserves also contributes to maintaining exchange rate stability, the SSI report says.

At commercial banks, the Wednesday USD-VND exchange rates were VND23,060 for buying and VND23,270 for selling. One the free market, these rates were VND20 higher both ways.

Similar to the exchange rate market, supply of domestic currency in the banking system continues to be at a high level compared to previous years despite the economy entering its peak season in the final quarter.

Overnight interbank rates have been kept stable at 0.19 percent per year and weekly interbank rates at 0.25 percent. Deposit rates are 2.5-2.8 percent per annum for terms of less than six months, 3.7-5 percent between six to 12 months, and 4.9-5.8 percent between for 12 months and above. These rates will continue to remain stable, the SSI report says.

In a separate report, brokerage Bao Viet Securities Company (BVSC) has said that with liquidity in the banking system continuing to remain high, interbank rates will likely remain low, below 1 percent in the final two months of the year.