Vietnam’s central bank to buy US dollars twice a week from November 11

The State Bank of Vietnam plans to resume buying spot US dollars from commercial banks twice a week starting November 11, at 25,500 Vietnamese dong per dollar. An executive at a commercial bank said the bank had received a notice about the purchases. Transactions are scheduled for Mondays and Wednesdays; if either day is a holiday, the transaction will move to the next working day.

According to the Interbank Market Research Association (VIRA), credit institutions and foreign bank branches with positive foreign currency positions may sell foreign currency to the State Bank of Vietnam. The maximum amount each institution may sell in a transaction is the amount needed to bring its foreign currency position back into balance. Eligibility will be assessed using position data from the end of the working day immediately before the purchase.

This is the first time in a considerable period that the State Bank of Vietnam has announced purchases of foreign currency from credit institutions. It bought US$6 billion in the first half of 2023. In early April this year, the bank said foreign exchange reserves stood at about US$87.6 billion, down US$24 billion from a peak of nearly US$112 billion in January 2022. Spot purchases could increase reserves while supplying dong to the banking system.

Outside the State Bank of Vietnam’s headquarters in Hanoi.（VietVance）

Last week, the State Bank of Vietnam also announced a foreign exchange swap facility with a 182-day term and a maximum limit of US$2 billion. It will first buy dollars from banks at 24,399 dong per dollar, then sell the dollars back when the swaps mature and withdraw the dong it had supplied. Spot purchases have no scheduled reverse transaction. The dollar–dong exchange rate has been relatively stable recently, while commercial banks’ dollar quotes have continued to fall. Banks’ demand for dong funding has risen to support lending, particularly for large projects.

Source: VietVance