Vietnam adjusts average inter-bank VND/USD exchange rate by announcement of the State Bank of Vietnam (SBV) from 21,673 to 21,890 (by +1%) applicable to August 19, 2015, at the same time, adjusts the exchange rate band from +/-2% to +/-3%. With the average inter-bank VND/USD exchange rate of 21,890 and the exchange rate band of +/-3%, then the ceiling VND/USD exchange rate is 22,547 VND/USD and the floor rate is 21,233 VND/USD.
According to Deputy Governor of the SBV Nguyen Thi Hong, in order to proactively and flexibly respond to the the biggest decrease in CNY over the past two decades, the SBV decided to adjust the exchange rate band from +/-1% to +/-2% on August 12, 2015. The is timely solution which suitable to the practice.
On the question of why the State Bank did not adjust immediately once but again split into 2 times and only one week apart, Mrs. Nguyen Thi Hong said: The adjustment range +/- 2% increased on Aug 12 is the solution initially to cope with the CPY suddenly devalued.
Nevertheless, after the strong devaluation of CPY, the psychological pressure in the domestic market has not been released due to Fed’s anticipation of interest rate raising. In order to proactively regulate the market, the SBV adjusts the average inter-bank VND/USD exchange rate from 21,673 to 21,890 (by +1%), at the same time, issued Decision No. 1636/QĐ-NHNN on August 18 to stipulate the VND/USD spot exchange rate. Accordingly, the VND/USD exchange rate band was adjusted from +/-2% to +/-3%.
Thus, with the adjustment of the average inter-bank VND/USD exchange rate by 1% and the exchange rate band of +/-3%, the VND/USD exchange rate flexibility is efficient to respond to the negative fluctuations in the domestic and international markets not only from now to end 2015 but also in the first months of 2016, thereby stabilizing the forex market and ensuring the competitiveness of Vietnam’s goods.
Source: http://vietlaw4u.com/
Key words: Vietnam, adjusts, average inter-bank VND/USD exchange rate
