Vietnam tells companies to cash in dollars
HANOI, - Vietnam announced on Tuesday it had tightened regulations for firms with foreign currency revenues, and that all surplus amounts would have to be changed into non-convertible dong.
The move, a day after Vietnam depreciated its currency by more than 5.0 percent, came as
part of a raft of recent legislation that aims to shore up confidence in the dong and suck hard
currency back out into the dollar-starved economy.
An official from the Government Office said the new prime ministerial decision, which
came into effect on Monday, would not affect access to hard currency by foreign invested
companies.
``(The decision) will not have a negative impact on existing government policies that
are being improved to assist foreign investment,'' he said.
A senior State Bank official declined to comment on the new regulations.
Under the decision, firms currently permitted to exchange dong revenues for dollars will
have to sell hard currency that is surplus to their normal legal operating requirements.
In addition, companies will now only be allowed to hold one foreign currency account
and have to close any others by a March 31 deadline.
Foreign currency held by firms without state exchange guarantees, from registered
investment capital and loans, or from other forms of offshore funding is excluded from the
decision.
Bankers were slow to react on Tuesday, but most expressed concern.
``You've got to be worried by it. (But) they want to try and get the situation under control
as there's no dollars out there,'' a foreign banker in Hanoi said.
The hard currency crunch in Vietnam has steadily worsened in recent months as firms hoard dollar revenues as a hedge against the weakening dong.
After Monday's dong depreciation the currency immediately fell close to its new interbank trading band floor of 12,980, and on Tuesday morning was being offered at 12,968.
REUTERS News Service - Feb 17, 1998.
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