In the afternoon of May 8, one US dollar in the free market was exchanged for VND16,340. People’s purchase of US dollars in large quantities sent prices soaring. Is this the best solution? VOV interviewed head of the Foreign Exchange Management Department under the State Bank of Vietnam (SBV) Truong Van Phuoc about the issue.
VOV: The US dollar value has surpassed the VND16,000/one dollar mark. What is the main cause of the current soaring prices?
Mr Phuoc: The exchange rates between the US dollar and the VND over the past three years have been stable with an average increase of less than 1 percent against the VND.
During the past few months, one US dollar has traded at between VND15,950 and 15,980. However, when surpassing the VND16,000/one dollar mark, the symbolic increase has caused understandable anxiety.
VOV: Now that the exchange rate between US dollar and the VND on the free market has surpassed the 16,000VND/one US$ mark, what is the State Bank of Vietnam supposed to do?
Mr Phuoc: Vietnam’s trade balance in the first four months of this year has improved considerably. We have escaped a trade deficit, then gained a balanced trade status and now have started to have a trade surplus. This demonstrated that the foreign currency amount the national economy earned from exports is enough to meet payment requirements and pay for imported goods and services. We consider this an important factor. The State Bank of Vietnam aims to help enterprises and people access proper information. There is no reason to make the US dollar price increase sharply on the domestic market, particularly as the US dollar is suffering heavily on the international market. However, Vietnam does not allow an increase in the value of the VND because the country is implementing policies to promote exports and control an excess of imports over exports. If the VND loses its value, it cannot be allowed to cause a shock on the market.
VOV: Could you give some advice to those flocking to the currency exchange shops to buy US dollars?
Mr Phuoc: I think it is necessary to update information. Vietnamese enterprises and people have been provided with sufficient currency to make payments at commercial banks and credit organisations. Meanwhile, a small group of people are flocking to buy foreign currencies, as they do not have accurate information. They will suffer heavy losses.
Editor’s note: Due to a fever in gold prices and shares in recent times, there has been a growing tendency for people to buy foreign currencies as they can quickly access information about the market. There are also certain people suffering heavy losses from buying gold. Therefore, with Mr Phuoc’s advice, we hope that those who want to reserve gold and dollars should make careful considerations to avoid losses and fluctuations in the foreign currency market.
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