The State Bank of Vietnam (SBV) has initiated the sale of US dollars to banks with negative foreign currency positions.

The intervention, backed by foreign exchange reserves near $100 billion, is a strong measure aimed at stabilizing the Vietnamese dong (VND), which has depreciated by over 5% against the USD since the start of the year.

The SBV is selling USD 1 at VND 25,450, matching the selling exchange rate listed at the State Bank's Exchange. This price is VND 23 lower than the current ceiling price of VND 25,473. Eligible banks with negative foreign currency positions can purchase USD up to the threshold needed to balance their positions.

"This is a very strong intervention measure, relieving market psychology, clearing supply and ensuring smooth foreign currency liquidity," stated Pham Chi Quang, Director of the SBV's Monetary Policy Department.

The surge in the exchange rate is attributed to both global and domestic factors. "US inflation remains high, prompting the Federal Reserve to potentially extend its period of higher interest rates," notes Mr. Le Anh Tuan, Investment Advisory Director of Dragon Capital.

This strengthens the USD internationally. Locally, increased demand for foreign currency, particularly from businesses such as iron and steel importers, is adding pressure.

Despite fluctuations, the VND's depreciation remains slower than currencies of other regional economies like Taiwan, Thailand, South Korea, and Japan.

The SBV assures that it is closely monitoring the exchange rate and is prepared to take further measures to ease pressure on the market, including issuing bills to absorb excess dong in the interbank market.