For many months, the USD/VND exchange rate on the “black market” has always been much lower than that on the banking system. However, from the afternoon session of August 20, the greenback suddenly heated up, surpassing the 24,000 USD/ounce mark and even surpassing the exchange rate on the official market.
Specifically, by the end of the afternoon of August 20, at Hang Bac and Ha Trung, the golden streets of Hanoi, the USD price was commonly traded at: 24,050 VND/USD - 24,150 VND/USD, an increase of 150 VND compared to the end of last week. Thus, the greenback on the black market was higher than at the bank.
At the end of August 20, the USD/VND exchange rate at Vietnam Joint Stock Commercial Bank for Industry and Trade (VietinBank) stopped at: 23,610 VND/USD - 24,030 VND/USD, 440 VND/USD lower for buying and 120 VND/USD lower for selling in the free market.
Orient Commercial Joint Stock Bank (OCB) has not changed its listing yet. The USD/VND exchange rate is still trading at: 23,636 VND/USD – 24,061 VND/USD, more modest than the exchange rate being bought and sold at Hang Bac, Ha Trung.
At the Joint Stock Commercial Bank for Foreign Trade of Vietnam, the USD/VND exchange rate closed the first session of the week at: 23,630 VND/USD - 23,970 VND/USD, unchanged from the end of last week, 420 VND/USD lower for buying and 180 VND/USD lower for selling compared to the black market USD.
The USD in the free market increased sharply in the context of the exchange rate in the banking market and the greenback in the world market decreasing.
After a very long period of being in the "underdog" position, the "black market" USD price suddenly increased sharply and surpassed the greenback in the banking market. Illustrative photo
After five straight weeks of gains and hitting a two-month peak, the dollar has been buoyed by improved risk sentiment in Europe, with attention shifting to the US Federal Reserve's Jackson Hole symposium starting on Friday.
The dollar index, which measures the currency against six other major currencies, was last down 0.2% at 103.18, but remained close to Friday's two-month high of 103.68.
“Risk appetite seems much more stable than it was a few weeks ago, which seems to be weighing on the dollar,” said Michael Brown, market analyst at Trader X.
Fed Chairman Jerome Powell will speak on Friday and his comments could set the tone for US Treasury yields, which have boosted the dollar in recent weeks.
The 10-year yield rose 14 basis points last week to hit a 10-month high of 4.328%, just shy of a 15-year high.
This year's theme of the annual meeting in Wyoming is “structural change in the global economy.”
“Two things could happen: The decade-long ultra-low interest rates supported by ultra-low inflation could end,” said Vishnu Varathan, head of economics and strategy at Mizuho Bank in Singapore. “And global policymakers may want to keep real interest rates low for a while.”
Meanwhile, the Australian dollar traded at $0.6420 and the New Zealand dollar, at $0.5926, had been pegged near nine-month lows hit last week after China's interest rate cut disappointed markets on worries about its slowing economy.
China cut its benchmark one-year lending rate by 10 basis points and kept the five-year rate unchanged, against economists' expectations of a 15 basis point cut for both.
“The authorities are very wary of the risks of rekindling the property boom and that almost automatically leads to a depreciation of the currency as policy is loosened as a kind of escape valve,” said Adam Cole, chief currency strategist at RBC Capital Markets.
“That’s what we expect going forward, and it’s no surprise that that’s spilling over into the G10, largely due to the underperformance of the Australian dollar.”
The offshore yuan fell to a weak 7.3 per dollar before stabilizing after Reuters reported that Chinese state banks were reportedly aggressively mopping up offshore yuan liquidity, a move that increases the cost of shorting the currency.
China's currency reversed course in offshore markets and was last up 0.2% at 7.2909 per dollar.
Like the yuan, the yen is also being watched for intervention, having fallen to levels that authorities intervened at last year. It fell 0.3% to 145.89 per dollar in European trade.
The euro rose 0.3% to $1.0906. The pound edged up to $1.2756 and the Swiss franc was just above a six-week low of $0.8793 hit last week.
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