For nearly one-year, the US dollar has been no longer listed in portfolio of many investors. At that time, the greenback has been avoided when the longer investors kept US dollars, the bigger they lost. Within only less than first three months of the year, the US dollar reduced by up to 3% against dong, worrying many individual investors, depositors. By early March, some investors had to accept to exchange US dollars for dong at the forex rate of 15,300 dong a US dollar.
However, since the start of this week, the dong/US dollar rate has unexpectedly increased. Some banks have bought in US dollars at 15,930 dong a US dollar by March 26. In the free market, the exchange rate of 16,000 dong a US dollar has also been re-set up after nearly one-year.
Such quick and surprising move has made many investors fail to snap up the good opportunity timely. Compared to the bottom level of 15,300 dong a US dollar, the current level has increased by nearly 5%, which is five times as much as deposit interest rates within less than one-month. The forex rate is forecasted to further grow in the upcoming time.
The growth of 100 dong a US dollar in banks and 300 dong a US dollar in the free market has not been seen for one-year. The main reasons are as follow:
Firstly, that the State Bank of Vietnam has continuously widened the forex trading band has generated an impetus for the forex rate to change quickly and strongly, timely reflecting demand and supply for foreign currencies in the market.
Secondly, since the start of March, demand for foreign currencies of commercial banks has signalled a re-surge. The US dollar deposit interest rate has simultaneously increased up to the peak of 6.9%. The competition in attracting US dollars among banks is having a tense sign. Demand for foreign currencies for import started strongly growing.
Thirdly, after the US Federal Reserve's consecutively cutting its key rate, the US dollar price in the world market has recovered against other key hard currencies. Such a move has had certain impacts on the domestic forex rate.
Fourthly, since the end of 2007, many commercial banks have run big losses in forex trading because the US dollar has continuously reduced against dong. With the demand and supply basis, commercial banks have pushed the forex rate strongly in a bid to overcome the above gloomy situation.
Fifthly, the prime minister continued instructing the central bank to buying in foreign currencies, which is creating a favourable outlet, helping demand and supply for foreign currency balance.
Additionally, a recent move in the forex market is being formed is that demand for converting dong into US dollars of foreign investors has been increasing, which may be because they want to remit foreign currencies back to their homelands.
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