The Vietnamese government is capable of interfering in the foreign exchange market to stabilize Vietnamese dong (VND) when needed, and will ensure information transparency crucial to gaining public trust of the currency, local newspaper Vietnam News on Tuesday quoted Prime Minister Nguyen Tan Dung as saying.
The recent appreciation of the U.S. dollar over VND in the free market was mainly triggered by speculation, he said. The government ruled out any plans to depreciate the currency in the foreseeable future.
"Given the country's current balance and the overall economic situation, there is no reason for a devaluation," the prime minister stated.
He said that other than trade deficit, the national balance of payment in the first five months of this year recorded a surplus of one billion dollars, and the figure was likely to keep on increasing in the medium term. "It would definitely strengthen the liquidity of the economy," Dung said.
Besides, the foreign currency reserves of the State Bank of Vietnam, the country's central bank, were enough to allow investors in Vietnam to transfer their foreign currencies abroad, he said.
To maintain VND's stability, the government needed to consolidate public confidence in the banking sector and ensure attractive interest rates, he said, adding that the two measures were being carried out.
The State Bank-approved trading band for VND and U.S. dollar is now between plus and minus two percent. These currencies, however, have been traded at a much higher band in the free market.
Last week, dollar prices were pushed up to a record rate of 18,500 VND per U.S. dollar on the free market, while the official inter-bank rate hovered at 16,200 VND. The government swiftly cracked down on illegal foreign exchange activities in the market.
Under current regulations, exchange agents can buy foreign currencies from individuals, but are not allow to sell them back. They can sell the currencies only to credit institutions.
In practice, individuals have been buying foreign currencies, including the U.S. dollar, from exchange agents.
Source: Xinhua
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