Dealing with foreign currency: The step in the right

Efforts to solve the exchange rate are the initial success. However, efforts must be sustained by creating discipline in forex trading, creating a mechanism for people to buy foreign currency when necessary and pay attention to recommendations on bringing long-term rates more.

1, exchange rate policy has to take steps to correct the basic line with reality. The result is less than 70 days, free-market exchange rate was "subdued", equal to the official exchange rate and exchange rate fluctuations are listed by the bank. No doubt at this time the State Bank (SBV) has actively control the foreign exchange market. The next part is to maintain and strengthen the initiative should look like.

The step in the right ...

Credit institutions that began on 14-4-2011, a day after applying the ceiling interest rate of foreign currency 3% / year for residents, they bought U.S. dollars in cash of the population the listed price. The big banks are buying millions of dollars / day, smaller banks are several hundred thousand / day. The value of each account purchase several thousand dollars / time, including many foreign exchange savings due have been sold to bank customers, the money sent back.

Most powerful driving force for the movement of foreign currency savings into coins, and even appeared on a small scale, the difference in dollar interest rates - Vietnam dong to 11% / year.The spread can be larger because the customer has agreed with the interest rate banks. As a savings over a billion, we have agreed to the interest rate to 17% / year for a month period. Thus difference from foreign currency to 14% / year.

Thrust Monday is the official exchange rate will not fluctuate significantly over the last 3-4 months after being adjusted to 9.3% in the direction of currency depreciation against the U.S. dollar, while the amplitude was was pulled back 1% short. Recalling Monday thrust to stress level was definitely a strong adjustment had a positive effect on the market.

Tuesday thrust can not help mentioning that the strict control of the agent, the desk, currency exchange counters. Along with the tightening of money supply contracts in various reclining, forcing those who hold foreign currencies when converted to the currency requirements are not met or are met with seriousness. These measures have been implemented fairly uniform, appropriate time and complement each other relatively flexible.

... And the next step

Like it or not, we must also recognize currency is not convertible, not create absolute confidence of the people. That is why one of the basic content of the current Ordinance on Foreign Exchange assumes people have foreign ownership. 

According to Notice No. 84 dated 13-4-2011 of the Government Office, the central bank assigned to draft amendments and supplements a number of regulations on foreign exchange management to the Government for consideration.

The amendments focus on the regulation of foreign borrowing and repayment of government enterprises not guarantee loans and foreign debt recovery of credit organizations; foreign currency trading of the corporation, state corporation ; lower limit total foreign currency position of credit institutions; amount of foreign currency in cash up to be brought overseas without a declaration of U.S. $ 5,000.

Interesting than the central bank shall coordinate with the ministries should establish the revised draft Ordinance on Foreign Exchange in the direction of overcoming the basic condition of dollars. The revised text of the most highly related to foreign exchange that the Government's determination to make changes based on foreign currencies - an integral part of monetary policy. But how the amendment, the level of the stars, short-term implementation schedule depends on the foreign exchange market itself, which is wider than the stability, development of macroeconomics.

The monetary policy more than anyone understand the flow of foreign capital flow into Vietnam every year is always greater than the flow of capital, but already many years our balance of payments deficit and the error in the balance for national accounts. The last step of a foreign policy aimed to transform the error into the correct number. Such remittances may flow into the banking mechanism to offset the trade deficit. Reserve in the population as foreign currency savings can be transformed into a national reserve of foreign currency as people sell to the bank, the bank sold to banks. Such changes will gradually build a larger role in billing and payment towards the absolute role of the local currency.

SJC gold now, as Deputy Governor Nguyen Van Binh wrote in a recent, full functionality of a coin Monday. Foreign currency payments can also function. Like it or not, we must also recognize currency is not convertible, not create absolute confidence of the people. That is why one of the basic content of the current Ordinance on Foreign Exchange assumes people have foreign ownership.

The settlement created the role of absolute and sole currency within the territory of Vietnam is the inevitable destination of monetary policy, but it takes time and especially it is suitable for real economy each specific stage.

Dealing with foreign currency

So far we have no official statistics of foreign currency held by the people. Currently the bank's total loans, according to Circular 13 and 19, with 80% of the total capital raised. If the total outstanding balance of the bank late in 2010 was 2.3 million billion, plus 110,000 billion credit growth in quarter 1 to 2011 (4.81%), total loans three months was estimated at 2, 41 million billion, total capital raised an estimated 3 million billion. Usually foreign currency debt by 25% of total loans, or about 600,000 billion, equivalent to 28.7 billion dollars. Since last year, total foreign currency loans above U.S. $ 2 billion compared to total deposits. If you subtract this number and assuming 50% of foreign currency structure of the population, a rough estimate of people at the bank is sending more than 13 billion dollars.

Number of foreign currencies such as the internal forces of the economy. The problem is how to promote the internal forces that, especially in the conditions we need capital to grow today.Is it radical when we expect the transition to the immediate cash of U.S. $ 13 billion it? The switch can not be measured in months, by which you have in years. Not to mention the need to prepare the conditions for the dong can assume the role of long-term means of holding foreign currencies instead. Currency is strong, it is not negative. The power that requires the restoration, maintenance, take root and spread steadily, but not leapfrog as a certain production lines.