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Posts Tagged ‘yearend’

Yearend dollar demand piles up pressure on local importers

In Uncategorized on December 16, 2010 at 10:05 am

Surging demand for the US dollars at yearend pushed the dollar/Vietnam dong exchange rate up to the highest ever of VND21,570 on the unofficial market on December 1st, which will hurt local importers badly.

(Photo: Minh Tri)


The surge usually come at the end of every year, when local businesses buy more shipments to prepare for the Lunar New Year season and foreign firms need to transfer dollars to their home. It’s also the due dates of other businesses, who have to pay US dollar debts.


Many commercial lenders are indirectly selling the greenback at higher rates than the State Bank of Vietnam’s regulated one by charging foreign currency transactions fee and cash counting fee and payment fee, many importers said. 


Local importers have to accept to pay those extra fees as they have no other choice, said Vietnam Young Business Association chairman Vo Quoc Thang.


They need to pay their foreign suppliers in time, so they are willing to buy dollars at high prices, he said. With purchase orders’ prices remaining unchanged, these extra fees generate big losses to the importers.


Do Duy Thai, general director of the steel maker Thep Viet, said commercial banks sell the greenback at the exchange rate of VND21,550 per one US dollar. “Both bank interest rate and the US dollar/Vietnam dong exchange rate are on a rise, leaving local businesses struggling to pay their imported shipments,” Thai said.


A director of a Ho Chi Minh City-based lender, who wanted to be unnamed, said banks bought dollars from exporters, who tried to take profits from the dollar’s surging demand by selling at high prices.


Therefore the lenders will incur losses if they sell dollars at the regulated rate, the director said.


The State Bank of Vietnam earlier announced it would continue to sell dollars to essential-product importers, but commercial banks said the supply didn’t meet the demand.


Dr. Tran Du Lich, member of the National Monetary Policy Consulting Council, recommended that the central bank should name the importers, who are allowed to buy dollars, so they don’t have to purchase at the unofficial market.


This move will also prevent local businesses from importing luxury products, which will widen the trade gap. Lich said. The central bank also has to strictly forbid illegal foreign currency exchanges, which are taking place at the so-called black market, he said.


Nguyen Hoang Minh, deputy director of  the State Bank of Vietnam’s Ho Chi Minh City branch, noticed speculators pushed the dollar/Vietnam dong exchange rates on the unofficial market up to cash in the rising demand.


Statistics of the branch shows that the amount of US dollar deposits reached VND188.2 billion (US$9 million), rising 12 percent so far this year. The amount of US dollar loans rose 35.4 percent to VND184.880 billion, according to the central bank’s HCMC branch.

Source: SGGP

Yearend dollar demand piles up pressure on local importers

In Uncategorized on December 16, 2010 at 10:05 am

Surging demand for the US dollars at yearend pushed the dollar/Vietnam dong exchange rate up to the highest ever of VND21,570 on the unofficial market on December 1st, which will hurt local importers badly.

(Photo: Minh Tri)

The surge usually come at the end of every year, when local businesses buy more shipments to prepare for the Lunar New Year season and foreign firms need to transfer dollars to their home. It’s also the due dates of other businesses, who have to pay US dollar debts.


Many commercial lenders are indirectly selling the greenback at higher rates than the State Bank of Vietnam’s regulated one by charging foreign currency transactions fee and cash counting fee and payment fee, many importers said. 


Local importers have to accept to pay those extra fees as they have no other choice, said Vietnam Young Business Association chairman Vo Quoc Thang.


They need to pay their foreign suppliers in time, so they are willing to buy dollars at high prices, he said. With purchase orders’ prices remaining unchanged, these extra fees generate big losses to the importers.


Do Duy Thai, general director of the steel maker Thep Viet, said commercial banks sell the greenback at the exchange rate of VND21,550 per one US dollar. “Both bank interest rate and the US dollar/Vietnam dong exchange rate are on a rise, leaving local businesses struggling to pay their imported shipments,” Thai said.


A director of a Ho Chi Minh City-based lender, who wanted to be unnamed, said banks bought dollars from exporters, who tried to take profits from the dollar’s surging demand by selling at high prices.


Therefore the lenders will incur losses if they sell dollars at the regulated rate, the director said.


The State Bank of Vietnam earlier announced it would continue to sell dollars to essential-product importers, but commercial banks said the supply didn’t meet the demand.


Dr. Tran Du Lich, member of the National Monetary Policy Consulting Council, recommended that the central bank should name the importers, who are allowed to buy dollars, so they don’t have to purchase at the unofficial market.


This move will also prevent local businesses from importing luxury products, which will widen the trade gap. Lich said. The central bank also has to strictly forbid illegal foreign currency exchanges, which are taking place at the so-called black market, he said.


Nguyen Hoang Minh, deputy director of  the State Bank of Vietnam’s Ho Chi Minh City branch, noticed speculators pushed the dollar/Vietnam dong exchange rates on the unofficial market up to cash in the rising demand.


Statistics of the branch shows that the amount of US dollar deposits reached VND188.2 billion (US$9 million), rising 12 percent so far this year. The amount of US dollar loans rose 35.4 percent to VND184.880 billion, according to the central bank’s HCMC branch.

Source: SGGP

Local businesses borrow at any costs for booming time at yearend

In Uncategorized on December 16, 2010 at 10:05 am

Financial experts said many businesses would be willing to borrow money at the current rates as they need large sources of capital at the end of the year, which is expected to be a booming time of the local retail market.

A cash teller (left, in blue) talks with a client at the Asia Commercial Bank (Photo: Minh Tri)

At some commercial banks, deposit rates reached 15-16 percent per annum last week, while lending rates for businesses and individuals are up to 17-19 percent and more than 19 percent.


Some small and medium enterprises disclosed lenders’ current lend rates remained much lower than unofficial sources’ ones, which can be up to 3-4 percent per month or 48 percent per annum.


High interest rates showed commercial banks’ credit growth last month was a little bit slower than previous months, according to Nguyen Hoang Minh, deputy director of the State Bank of Vietnam’s Ho Chi Minh City branch.


He expected the banks’ more steady liquidity combining with local firms’ large demand for capital this month will put the growth rate back on track.


However, the central bank’s HCMC branch noticed in a report that interbank rates still reply mainly on the state-owned lenders. Commercial banks and financial firms are often clients of the state-run lenders. The interbank rates therefore will increase rapidly if  the state-owned banks, in some cases, refuse to give loans to commercial lenders, the report said.


The state-owned lenders mostly have to say no to commercial banks or financial firms, whose plans on using capital are risky and unreasonable.


Economists said many lenders’ growth rates nearly reach their annual target, so they will be unwilling to loan more.


The credit growth rate of the Military Bank was 5 percent higher than October’s rate and rose 50 percent so far this year. The lender had to slow down last month’s growth rate as they were afraid it would surge over this year’s target, an officer at the bank said, without providing how much the targeted rate is.


The state bank’s HCMC branch expected credit growth rates this year would rise 25 percent year-on-year to VND699.81 billion (US$35 million), and the deposit would increase 27 percent year-on-year to VND766.25 billion ($38.3 billion).


However, some banks will likely to miss their target. Asia Commercial Bank, known as ACB, said the number of personal loans was small because of the high interest rates. Other commercial lenders said they still accepted personal loan applies, but would offer the loans next year.

Source: SGGP