A big amount of foreign currencies has been sold by people recently since they, after weighing pros and cons, decided that it would be better to keep dong than dollars.

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A big amount of foreign currencies has been sold by people recently since they, after weighing pros and cons, decided that it would be better to keep dong than dollars.

Post  kcs on Thu Jan 31, 2013 3:42 pm

VietNamNet Bridge –

The State Bank of Vietnam has never before bought foreign currencies so continually and in such a big quantities. The foreign currency reserves have reportedly reached the highest peak so far. Instead of keeping foreign currencies under the pillow, people now sell foreign currencies for dong.
Analysts recalled the days just before the 2012 Tet, when the dollar price fell sharply. Commercial banks then quoted the purchase price lower by up to VND300 per dollars than the sale price – a rarely seen gap between the sale and the purchase prices.
The market then witnessed a very big supply of foreign currencies, when people and businesses rushed to sell dollars to get dong to make payment for the deals at the end of the year.
The foreign currency supply has always been profuse over the last many months. The State Bank’s weekly updated report always showed that credit institutions purchased foreign currencies more than sold.
Thoi bao Kinh te Vietnam has quoted its sources as saying that the excess of purchase over sale has been seen since early 2012. The State Bank has never before purchased foreign currencies so continuously.
At the end of October 2012, the State Bank said it had bought $10 billion by that time. Meanwhile, the figure might have reached $15 billion, according to the newspaper. And just in the first month of 2013, the State Bank bought $2 billion already.
Vietnam once witnessed the strong supply of foreign currencies in 2007, when Vietnam officially was admitted to WTO and welcomed a new foreign investment wave. However, the foreign currency inflow to Vietnam then only lasted a short time, which ended in 2008.
And now Vietnam also is seeing a strong supply of foreign currencies, but it is from the public this time. In other words, the State Bank of Vietnam has successfully “broken the foreign currency ice” in the public, which has prompted people to sell dollars instead of keeping at their coffers.
In 2012, the general payment balance saw the record high at over $10 billion. Meanwhile, the State Bank bought $15 billion. The five billion dollars were believed to come from the public. Analysts have noted that the dollar deposits at banks have decreased sharply, while the dong deposits have increased rapidly. By the end of 2012, the foreign currency deposits from the public had reportedly decreased by 13 percent over the end of 2011, while the dong deposits increased by 36 percent.
It was obvious that people have sold dollars when they believed that it would be more profitable to keep dong. The dollar ceiling deposit interest rate had been kept at a low level of two percent, while the dong/dollar exchange rate was believed not to fluctuate by more than two or three percent.
Meanwhile, it was more profitable to deposit in dong with the interest rate of 14 percent per annum.
The policies relating to the dong/dollar exchange rate applied by the State Bank I 2012 have been praised as the biggest success of the central bank in the year. The dong/dollar exchange rate was stable, thus helping the State Bank buy more foreign currencies. Meanwhile, the foreign currencies among people have been released their coffers to be, thus helping ease the “dollarization” in the national economy.
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Updated January, 30 2013 08:47:00

The Tay Do Garment Joint Stock Co is one of the nation's successful businesses despite the economic downturn. — VNA/VNS Photo Duy Khuong
HA NOI (VNS)— All sectors and localities should keep making efforts to stabilise macro-economy, control inflation and settle difficulties for enterprises, in spite of good results in economic growth in this first month of the year, said Prime Minister Nguyen Tan Dung yesterday at the monthly Government meeting. He urged them to co-ordinate tightly, with timely reports to the Government on barriers to effective solutions.
The statistics of the Ministry of Planning and Investment showed that more than 3,830 enterprises had been newly established with registered capital of more than VND15.9 trillion (US$757 million) between January 1-20.
Export turnover hit US$10.1 billion and the index of industrial production this month increased higher than the same period last year by 43.2 per cent and 21.1 per cent respectively.
More than 130,000 jobs have been created this month, about 7,000 of them overseas.
The Consumer Price Index (CPI) has increased by 1.25 per cent this month in comparison with last month due to the application of new hospital fee levels, food supplies being affected by long-lasting low temperatures and difficulties in breeding and a higher demand in clothes for Tet.
Deputy Prime Minister Vu Van Ninh said positive economic results started from the beginning of this year. However, many shortcomings had remained.
He asked relevant agencies urgently to publish necessary documents as key guidances to realise the Government's resolution and policy.
Meanwhile, Deputy Prime Minister Hoang Trung Hai suggested agencies and localities make sound management decisions and inspections of pricing transfers.
He also said that foreign experts could be hired to do auditing and check pricing transfers.
Dung also asked the State Bank to make good management decisions on interest rates.
The Ministry of Finance is assigned to accomplish disbursements of funds from last year and keep track of developments to allocate funds for key projects at the right time.
Relevant agencies in agriculture were asked to buy rice for stock to prevent prices from going down and negatively affecting farmers.
The Prime Minister asked for a boost in administrative reforms and anti-corruption measures and the settlement of petitions and denunciations.
Tet preparations
Regarding preparations for Tet holiday, localities and relevant agencies were asked to supply enough necessary goods and control their prices.
Deputy Minister of Agriculture and Rural Development Bui Ba Bong said the ministry had to work out plans to ensure enough food supplies and inspect the quality of products for the holiday.
Dung said people's higher traveling demands during the holiday should be met. Lack of transport vehicles should be prevented. If necessary, transport enterprises in aviation and railways should lower ticket prices to breakeven prices, he said.
Ministry of Transport Dinh La Thang said transport enterprises had allocated enough vehicles and raised the number of their journeys.
He said air and railway tickets for some days were still available. He gave the assurance that no one would be prevented from arriving at their countryside due to lack of transport.
Dung also asked localities to pay special attention during Tet to people who had made great contributions to the country, and disadvantaged people.
The police should make strict checks into fire prevention activities and ensure traffic safety, he said.
Draft resolution
At the meeting, members of the Government discussed a draft resolution on urgent environmental issues.
These included the mismatch between development of industrial areas and infrastructure systems resulting in serious environmental pollution; lack of management of mineral exploitation and the failure in the treatment of waste in the health, industry and domestic sectors as well as exhaust fumes from transport vehicles and factories.
Also, the importing of backward technologies and degradation of biodiversity were key issues.
Members of the Government focused on some solutions such as improving the capability of environment officials at all levels, allocating funds for environment protection and assigning specific tasks to relevant agencies.
The draft resolution suggested that at least 1 per cent of total spending of the State budget be allocated to environmental protection.
The Prime Minister said it was necessary to publish the resolution to mobilise more effort for environment protection.
He said drastic measures should be adopted to end these issues. For example, there should be bans on the operation of industrial parks and mineral exploitation without waste treatment systems.
He also suggested sectors co-operate with each other to inspect violations in the field of environment. The draft resolution will be amended and submitted to the Prime Minister for approval. — VNS
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Last update 27/01/2013 (GMT+7)
VietNamNet Bridge – The signing ceremony of the EPC contract for the Nghi Son oil refinery project with a total investment of $ 9 billion took place this morning, January 27, in Thanh Hoa province, in the presence of Prime Minister Nguyen Tan Dung.

Prime Minister Nguyen Tan Dung attended the signing ceremony in Thanh Hoa today.
The contract was signed between the Nghi Son Petrochemical Co., Ltd. and a group of design, equipment supply and construction contractors, after nearly five years of preparation.
The Nghi Son oil refinery is a national key project, covering an area of 400 hectares in the Nghi Son economic zone (Tinh Gia, Thanh Hoa). The refining capacity is expected to reach 200,000 barrels per day (equivalent to 10 million tons a year,) with crude oil imported from Kuwait as raw material. The plant's products include liquefied petroleum gas, gasoline RON 92 and RON 95, jet fuel, diesel, paraxylene ...
The total investment of this project is nearly $9 billion, in which loans from domestic and foreign banks are expected to be nearly $5 billion. The rest is the capital of the investors, including the Vietnam Oil and Gas Group (PVN) with 25.1%, the Kuwait Petroleum International (KPI/KPE) 35.1%, Idemitsu Kosan Co. (Japan, IKC) 35.1%, and Mitsui Chemicals (Japan, MCI) 4.7%.
The group of contractors is led by JGC (Japan) and other members include, Chiyoda (Japan), GS E&C (Korea), SK E&C (Korea), Technip France (France), and Technip Geoproduction (Malaysia).
It is expected that the construction of the Nghi Son oil refinery will be completed in the fourth quarter of 2016 and it will be put into commercial operation in 2017, meeting about 40 percent of the national demand for petroleum.

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