March 11th, 2011 04:19 pm
VietFinanceNews.com – The central bank’s strong-worded warnings to foreign currency trading outside banks have sent ripples through the black market, as most private forex counters in Hanoi and then HCMC have refrained from money dealings these days.
Money changers in Hanoi City succumbed to the warnings first, as most dealers refused trading on Monday, while the phenomenon spread to HCMC a day later. Those in need of U.S. dollars now find it difficult to buy the greenback on the “black market”, which somewhat lends support to the local currency.
Some exchange counters at An Dong and Ben Thanh markets in HCMC that do not have forex exchange licenses still maintain operations but also have become so cautious, dealing in small volumes.
Nguyen Minh Anh, the owner of an exchange counter on Le Thanh Ton Street near Ben Thanh Market, said since last weekend when news came out that the central bank would combine with authorities to check money changers, most counters had become warier.
“The shops only trade with close customers as we are afraid of officials being undercover,” he said.
Bui Thi Yen, the owner of Bao Yen gold shop near An Dong Market, said all shops in the Agribank gold center on An Duong Vuong Street had fretted about the news that authorities would check and strictly punish those breaching the rule. Therefore, the money exchange operation had almost ground to a halt.
Yen said most of shops now acted as a go-between, meaning they will find dollars for those customers in need, but they did not keep foreign currencies at their shops to avoid the risks of being confiscated.
Anh said in recent days his shop traded about US$3,000 a day while Yen said her counter exchanged only some US$2,000 a day, a steep fall of some 80% from the previous week.
For that reason, Vietnam dong has been firmer against the dollar these days. The black-market rate has fallen to VND21,500 to the dollar on buying and VND21,650 on selling on Tuesday.
However, Anh said this was not the first time the authority had imposed controls on exchange services. “When the situation settles down, the trade will return to normal,” he said.
Meanwhile, in Hanoi, many exchange counters on Ha Trung Street have closed for two days for fear of punishment.
The Government in its recent resolution asked the central bank to collaborate with other authorities to strengthen supervision on foreign exchange operations. The central bank will issue regulations imposing stricter penalties on violators including revoking licenses and confiscating foreign currencies in the illicit trade.
Nguyen Hoang Minh, deputy director of the central bank’s HCMC branch, said the branch had plans to cooperate with other relevant authorities like market monitors and police to check illegal money changes in HCMC.
“I have suggested strong punishment against violators, but any move to confiscate their money must have approval from many relevant ministries,” he added.
The central bank’s HCMC branch has licensed about 75 exchange counters in the city but there are up to 4,000 gold shops that also act as money changers, so it will be difficult to check them all, Minh said. He added the branch had provided a list of legal counters to police to help with their checks at illegal places.
Meanwhile, dollars are in critically short supply at banks as enterprises do not want to sell dollars at the quoted price to banks due to a big difference between official and unofficial exchange rates. However, the leader of a joint-stock bank said the point was the price so if enterprises accept to buy dollars at a higher price, their demand will definitely be met soon.
Banks quoted the dollar at VND20,870 on Tuesday, or VND780 per dollar lower than the unofficial rate. Meanwhile, the dollar was traded at an average of VND21,065 on the inter-bank market on Tuesday.
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