Two signals strongly affect the US dollar/dong exchange rate

01-Dec-2016 Intellasia | VnEconomy | 6:00 AM Print This Post

The developments of US dollar/dong exchange rate have quickly been cooled down in the first two days of the week, after the dong interest rates rose sharply on the interbank market and the State Bank of Vietnam (SBV) sent an important message.

According to statistics, on the first day of the week – November 28th 2016, the average dong interest rates offered on the interbank market were very high compared to the low zone set in the third quarter of 2016. Specifically, the average offering interbank rate on overnight term at the beginning of the week has exceeded three percent per annum, much higher than the one percent per annum recorded in early November and the 0.5 percent per annum recorded more than a month ago.

On the interbank market, interest rate is the reference point that affects the exchange rate transactions. This is the highlight at the beginning of the week in the fast downtrend of the US dollar/dong exchange rate. In particular, on November 28th, the US dollar price on the interbank market fell fairly significantly by 35 dong compared to the session at the end of last week to 22,720 dong per US dollar. On November 29th, the decline occurred stronger as the US dollars were traded around 22,650-22,655 dong per US dollar, down by 60 dong per US dollar compared to the previous day. By the end of November 29th, the US dollar price was 22,690 dong per US dollar, down by 30 dong per US dollar.

Reflecting these movements, the US dollar/dong exchange rate on the listing of banks on November 29th has also cooled down rapidly, some time to 22,700 dong per US dollar. Closing the day, the US dollar/ dong exchange rate was 22,720 dong per US dollar.

Apart from the dong interest rate movements, the second signal which also strongly and directly influences the exchange rate is the listed exchange rates of the State Bank of Vietnam (SBV) Operations Centre.

In particular, from November 28th 2016, after the leader in charge confirmed the will to sell foreign currency to stabilise the market, SBV Operations centre has concretised it by selling US dollars at lower prices than the allowed ceiling amplitude. The selling price of US dollar at the centre – the direct unit to make intervention when the market significantly changes – was only 22,746 dong on November 28th, down by 50 dong per US dollar compared to the ceiling level. On November 29th 2016, the reference selling price of US dollar prices was 22,735 dong per US dollar, continued to be lower than the ceiling limit by 50 dong.

In a separate development, after the strong rise in the recent time, the US dollar price in the beginning of the week has declined on the global market, the US dollar-Index has fallen again by 0.16 percent on November 28th. In addition, other major currencies in the world have considerably been appreciating against the US dollar.


Category: Finance, Vietnam

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