Circular takes effect almost immediately to curb speculation and hoarding.
The State Bank of Vietnam (SBV) has issued Circular No. 15/2015/TT-NHNN, guiding foreign currency transactions by credit institutions.
The Circular took effect on October 5; must faster than the normal 45 days from the date of approval. It states that foreign currency transactions with banks must be accompanied by documents proving the purpose, amount, and duration of payments, which aims to stop speculation and the hoarding of currencies by enterprises.
If customers need to settle with partners within two working days, banks can sell foreign currencies immediately. When the payment term is more than three days banks are only allowed to sell forward exchange. For forward exchange transactions, the maximum term is 365 days. Circular No. 15 also regulates that the last day of forward exchange is not two working days before the due date of the enterprises’ payment.
The forward exchange rate between VND and USD in the transaction period will be defined by the parties’ agreement but will not exceed the rate determined on the date of the transaction.
According to the SBV, in August and September the fluctuation in USD/VND exchange rates led to a significant increase in USD deposits. This reflected speculation and the hoarding of foreign currency by many enterprises in the hope of preventing risks from increasing exchange rates even though their payments are not due.
As a result, at the end of September the SBV decided to cut the ceiling interest rate on dollar deposits to 0 per cent to reduce its attractiveness.