Dollar at new high against dong as trading band widens

The U.S. dollar rose to a new high against the Vietnamese dong Tuesday as the State Bank of Vietnam (SBV) enlarged the foreign currency’s trading band to 5% from 3%.

This meant that starting Monday, the U.S. dollar at commercial banks could be traded at up to 5% higher or lower than the central exchange rate announced by the SBV on a daily basis.

Domestic banks pushed up their dollar selling prices to around VND24,500 Tuesday afternoon, closer to levels in the free market.

Leading lender Vietcombank added VND35 to its Monday rate, selling the greenback at VND24,495. The selling price at BIDV and Sacombank was VND24,505 and VND24,500, respectively.

At the beginning of the day, the central bank raised its reference rate by 0.22% to VND23,637, an increase of 51 dong against Monday.

This year, the central bank has sold the U.S. dollar from the country’s reserves several times to seek to keep the dong stable amid the U.S. Federal Reserve’s monetary policy tightening. Experts have warned that Vietnam may face heavier exchange rate pressure towards the end of the year.