SBV starts to buy US dollars, pump Vietnamese dong into market

The State Bank of Vietnam (SBV), on December 15, announced the US dollar buying price at VND23,450 per dollar after not listing the buying price for about three months. It shows that the SBV has started to buy foreign currencies for intervention and inject the Vietnamese dong into the market because foreign currency liquidity has become less tense.

Accordingly, the SBV listed the reference exchange rate at VND23,652 per US dollar, down VND2 compared to the previous session. Notably, this morning, the SBV Operations Center announced the US dollar buying rate at VND23,450 per dollar, starting to purchase foreign currencies for intervention. Previously, on September 7, 2022, the SBV stopped listing the US dollar buying rate due to the tight liquidity in the foreign currency market. On September 6, 2022, the US dollar buying price was listed at VND22,550 per dollar by the SBV.

At commercial banks, the US dollar prices were also reduced by VND10-40. Specifically, at about 3 p.m., BIDV listed the exchange rate at VND23,380 per dollar for buying and VND23,660 for selling, down VND35 in both buying and selling rates. ACB reduced the US dollar buying price by VND30 to VND23,390 and kept the selling price unchanged at VND23,800.

Commercial banks said that the SBV would apply the plan to buy foreign currency for intervention from December 15, applicable to credit institutions with positive foreign currency status that wish to sell foreign currency to the SBV. The maximum amount of foreign currency purchased from each credit institution each time is equivalent to the level to bring the foreign currency status of that credit institution to equilibrium. The form of buying foreign currency for intervention is spot delivery.

Experts said that the SBV's buy-in move for foreign exchange intervention showed that the liquidity in the foreign currency market had eased. Previously, due to the pressure of the exchange rate, the SBV had continuously sold foreign currency to the market to intervene. Foreign currency liquidity becomes less tense due to some reasons. Specifically, the psychology of hoarding US dollars might have been relieved, thanks to the high deposit interest rates. Meanwhile, the US dollar price is also at a high level, prompting many US-dollar holders to sell dollars to commercial banks to switch to deposits in Vietnamese dong to earn more profits. Besides, the source of foreign currency at the end of the year is also more abundant thanks to exports, remittances, disbursement of FDI, surplus trade balance, or cash flow from newly-disbursed foreign currency loans, helping some banks to see excess foreign currency liquidity.

The exchange rate on the free market also decreased by VND15 compared to the previous day. The US dollar selling price at foreign currency exchange agencies is currently popular at VND24,060 per dollar for buying and VND24,130 for selling. This price is much lower than the peak price recorded in October 2022 at more than VND25,500 per dollar.