Forex trade, dong interest rates stable
14:30' 12/07/2007 (GMT+7)
Trade deficit seen growing toward year-end
Dollar/dong trading continued to be stable in the first week of the month in line with the official rate announced daily by the State Bank of Vietnam.
Both official and market rates have been reported at around VND16,130 per dollar. Importers are enjoying a zero swap point on the dollar/dong pair for tenors up to three weeks and just a few dongs as premium forward point for one-month tenor.
Regarding the county's trade balance issue, authorities have forecast a huge trade deficit, at around US$8bil, toward the year-end given that the first half's figure hit a record high of US$4.78bil.
The country has been spending lots of its foreign currencies built up from both FDI and FII flows for big projects' machinery and equipment imports.
It is reported the Vietnamese Government has decided to review the timetable for initial public offerings (IPOs) by big five State-owned banks and some giant companies this year to avoid a boost of supply that could hurt the local stock market.
IPOs by the five State-owned banks this year will be followed by several major State-run firms such as Electricity of Vietnam, Vinaphone, MobiFone and Vietnam Airlines next year and they could lead to stock prices declining from the market.
Vietcombank plans to offer its shares to the public in August 2007 together with the Mekong Delta Housing Development Bank.
Incombank plans its IPO in October 2007 and BIDV is projected to offer shares within the last quarter of this year while Agribank will launch an IPO in August next year.
The country's stock index has risen 34% so far this year, closing at 1,010.53 points by the end of last week.
Dong at stable start for July
The first week of July started with relatively stable Vietnam dong interest rates. The opening overnight rate on Monday offered on the inter-bank market was about 5%, higher than the closing rate of the previous week.
However, the overnight rate has steadily declined since then and reached 4.4% on July 9. Other tenors also had similar changes, which are larger for shorter tenors and not significant for six months and above.
These changes are 0.4% for one and two months, and 0.2% for three months. These declines right at the beginning of the month suggested that liquidity in the banking system remained healthy.
In the first week of July, the amount of dong withdrawals by the State Bank of Vietnam continued to be at a significant level. There was VND10.5tril taken out of the system via its open market operations and VND500bil via its weekly auctions. Once again, it proves that the dong is still in excess in the banking system.
News reports say interest rates for dollar deposits have firmed up slightly as demand for the greenback from importers is rising.
It is reported Vietnam's growing trade deficit underlined demand from importers for dollars to pay bills.
Some local commercial banks have raised their deposit rates by five to 20 percentage points per annum to meet increasing corporate demand for dollar borrowing.
(Source: SGT)
