Dollar rises on buying by importers, gold traders

The US dollar rose more than 1 percent in the past week on Vietnam’s unofficial markets to surpass VND18,000 per dollar for the first time this month on robust demand from importers and gold traders, dealers said.

At 03:45 GMT, the dollar was being offered at about VND18,030 in gold shops in Hanoi and Ho Chi Minh City where residents usually trade the currency, up from VND17,850 to a dollar a week ago. Dealers said importers’ demand to buy dollars to settle contracts surged in the past week as they bought more goods and raw materials to take advantage of the current lower prices. They also said the dollar was supported by demand from private gold traders who sought more of the currency to smuggle in gold to take advantage of the high local prices, which were about VND500,000 per tael higher than world prices this week. A tael is equal to 37.5 grams. Officials from gold trading firms have been lobbying the government to lift a gold import ban, in place since May last year, but the central bank has rejected the request. Meanwhile, on the official interbank market, the dollar was being sought at VND17,780-17,785 but currency traders said few deals were closed as sellers held back due to the gap between the official and unofficial markets. “The market is at a virtual standstill as no one is willing to sell when the black market rate is so different,” a trader at a foreign bank in Hanoi said. “Everyone is waiting to see what the central bank will do about this situation and whether it would intervene to provide more dollars to the system or let the dong fall further,” he added. The State Bank of Vietnam set the reference rate for Monday’s trading at VND16,938 dong per dollar, versus VND16,937 on April 10, according to the bank’s website. The currency is allowed to trade by as much as 5 percent on either side of the daily rate. Economists have said the government would have to let the dong fall more as weak exports and declining foreign investment weighed on the economy. Vietnam let the currency depreciate by about 8 percent against the dollar last year in the face of tough economic conditions. Source: Reuters