Move part of anti-dollarization efforts of central bank.
After March 31 certain enterprises will be not permitted to borrow foreign currencies from banks and then exchange it into VND to buy materials, according to Circular No. 24 from the State Bank of Vietnam (SBV).
The move is a further step from the central bank in its anti-dollarization efforts.
The Circular applies to enterprises that have demand for short-term capital to conduct export-related business activities.
There are still some enterprises allowed to borrow foreign currencies if their demand includes short-term borrowing to make export payments, short-term borrowing for the export or import of petrol; and borrowings for investing abroad.
Mr. Nguyen Hoang Minh, Deputy Director of the SBV’s Ho Chi Minh City Branch, was quoted as saying that the central bank previously allowed enterprises to borrow foreign currencies in order to increase credit growth in the context that VND interest rates were high. Now, though, the monetary situation is more stable and VND interest rates have come down.