Hanoi: Black Market and Bank Exchange Rates for USD Increase Simultaneously
According to a survey conducted by PV Tien Phong on Ha Trung Street (Hoan Kiem, Hanoi), a store selling USD at the most reasonable price announced the exchange rate on the morning of February 28th at 25,150 VND/USD. However, on Tran Nhan Tong Street (Hai Ba Trung, Hanoi), some gold shops offered a price of up to 25,250 VND/USD, and even some small gold shops in Long Bien and Gia Lam districts shouted the price of USD up to 25,350 VND/USD. This is also the highest price so far this year.
Not only does the USD price fluctuate in the free market, but the USD price at banks has also increased significantly. Specifically, Vietcombank listed the buying and selling price for USD at 24,430 – 24,800 VND/USD; BIDV listed the buying and selling price for USD at 23,495 – 24,805 VND/USD; Eximbank listed the buying and selling price for USD at 24,410 – 24,800 VND/USD. The central exchange rate published by the State Bank of Vietnam on the morning of February 28th was 24,014 VND, an increase of 10 VND compared to the morning of February 27th.
The reference exchange rate at the State Bank of Vietnam listed the buying and selling price for USD at 23,400 – 25,164 VND/USD, up 10 VND/USD compared to the previous session.
A gold shop owner on Ha Trung Street (Hoan Kiem) said that in recent days, in addition to the market spreading information about companies nearing the deadline for repayment of foreign currency loans, many people took advantage of the opportunity to buy USD, causing the price to rise.
According to Phu Hung Securities Company, there are four reasons for the sharp increase in the exchange rate. First, the market assesses that the Fed may not lower interest rates as expected. This will increase the interest rate gap between VND and USD and prolong it. Next, imports have also been continuously recovering through the months as businesses have increased the import of input materials. The total import value in January reached nearly 31 billion USD, the highest level since July 2022. Domestic imports alone reached over 11 billion USD (15% higher than the annual average in 2023).
Foreign currency demand has also increased as businesses make payments for foreign loans and transfer profits back to the country of origin. In addition, another reason is the hoarding of foreign currency in the context of the continuous increase in USD in both the domestic and global markets. This can be seen from the price of the greenback on the free market, as the price has continuously increased since the end of last year to 25,300 VND, maintaining a large difference (about 2.5%) compared to the interbank exchange rate.
HCMC: Bustling USD Black Market Trading
People buying and selling USD (taken at a foreign exchange point in District 1, HCMC on 28/2). Photo: U.P
The black market in HCM City almost never sees a shortage of customers coming to buy and sell foreign currency. On February 28th, around Ben Thanh Market area (District 1), many gold shops were crowded with customers buying and selling foreign currency. “Before Tet, my relatives sent me 1,000 USD from abroad, now I see the price is so attractive, so I took it to a gold shop to exchange for Vietnamese dong (VND). Yesterday, I went to a gold shop where they quoted 25,120 VND/USD, and in the neighboring gold shop, the price increased to 25,220 VND/USD. At noon today, my husband went to a foreign exchange point on Le Loi Street (District 1) and the price had increased to 25,450 VND/USD” – Ms. Thu Ha (from Binh Tan District) said.
At a foreign exchange point on Dong Khoi Street (District 1), when asked about the price of US dollars, the exchange staff here requested to see a stack of USD bills to check and then quoted a price for each bill. Specifically, old USD bills that are slightly yellowish are considered to be old, priced at only 23,500 VND/USD. Newer USD bills are priced at 24,700 VND/USD. “Brand new USD bills have a price of up to 25,450 VND/USD” – Mrs. Thanh Hoa (from Hoc Mon District) commented.
USD price continues to rise. Photo: PV
According to the observations of a reporter from Tien Phong, most of the gold shops on Gold and Silver Street in District 5, Hau Giang Street (District 6), Le Van Quoi (Binh Tan District)… provide foreign exchange services. There is no limit to the amount a customer wants to exchange. “With available idle money, I see that the USD is rising, so I just bought 5,000 USD. Many people say that the USD price will continue to rise, so no matter how you buy, there will be profits” – Mr. Le Van Thin (60 years old, from District 10) shared.
According to economist Nguyen Tri Hieu, the exchange rate increase around the Lunar New Year period is “not rare”. However, Hieu believes that it is difficult to predict the exchange rate. The exchange rate in the coming period depends heavily on changes in US monetary policy and Vietnam’s import-export situation.
Furthermore, only by sitting at home and making a phone call, after finalizing the buying and selling rate for foreign currency, staff from many stores will bring money to the customer’s location for exchange. Through the phone, Ms. M.T (a gold shop owner in District 1) informed us that the USD purchased at the exchange rate of 25,550 VND/USD and sent an employee to carry nearly 300 million VND to the customer’s house for exchange. “Since after Tet until now, the amount of USD transactions has increased compared to before. Customers who want to exchange a few hundred USD do it directly at the counter, and for large quantities, we invite them inside the house or send someone to their home for the exchange” – Ms. M.T revealed.
Still Under Control
Speaking with a reporter from Tien Phong, Mr. Nguyen Duc Lenh, Vice Director of the State Bank of Vietnam in Ho Chi Minh City, said that the recent fluctuation and increase in exchange rates are mainly due to psychological factors and short-term, while being associated with strong currencies worldwide.
“In my opinion, short-term exchange rate fluctuations are normal and appropriate, not worrisome. In it, the stability of the monetary and foreign exchange markets is an advantageous environment and continues to consolidate the trust of the people, businesses, and investors in the monetary policy, exchange rates, and interest rates of the State Bank” – Mr. Lenh assessed.
At a conference on the stock market on February 28th, Mr. Pham Thanh Ha, Deputy Governor of the State Bank of Vietnam (SBV), said that the agency is continuing to pursue flexible exchange rate management policies, appropriate to the market situation at home and abroad, and flexibly intervenes to stabilize the foreign exchange market. “Thanks to this, the exchange rate has been relatively stable compared to other currencies in the region, with smooth liquidity. By the end of 2023, VND has depreciated by about 2.89% against USD, in line with the general trend of other currencies in the region” – Mr. Ha said.
In 2024, the leaders of the SBV also affirmed that they will closely follow the market and the economy at home and abroad, closely coordinate with fiscal policies to proactively and flexibly manage. Ensuring foreign exchange supply and demand for the market and businesses is the task that the SBV is always closely following.
At the same time, Vietcombank Securities Company also provided comments, that in the first month of the year, foreign exchange demand began to increase thanks to improvements in export/import activities. As a result, the trading exchange rate at the banking system increased at certain times by over 1%. “The exchange rate will still be a big issue for operators in 2024. However, in addition to the difficulties, some supporting factors need to be acknowledged. The SBV has been flexible in exchange rate management for many years, so the market still expects that the exchange rate will fluctuate within a narrow range throughout the year” – the research team of Vietcombank Securities Company stated.
