The USD/VND exchange rate has started to cool down as the State Bank of Vietnam (SBV) has sold foreign currency in the recent two trading sessions, in a move to meet market demands and minimize the volatility of the USD/VND exchange rate. The move marked SBV's intervention into the supply/demand balance on the market, following a remarkable strengthening of the US dollar against the Vietnamese dong in both the free and official markets over the past month.

Pham Thanh Ha, head of the Monetary Policy Department (SBV) on July 2 stated the SBV may sell the dollar at a price lower than the market level, with the aim of stabilizing the macro-economy.

One day later, the SBV decreased the selling price of USD by 1% or VND244 (US$0.011) to VND23,050, which is VND264 lower than the ceiling level of the reference rate. 

Recently, some commercial banks started purchasing foreign currency at a softer price. According to SBV's representative, the USD selling and buying are normal practice of SBV.

"The market is stabilizing, while liquidity is at normal level. SBV will continue monitoring the financial market conditions," Ha told Dan Tri newspaper.

At present, the reference selling price of the dollar is hovering around VND23,050 a dollar, while the inter-bank exchange rate is around VND23,050. 

The USD/VND exchange rate quoted by commercial banks stands at VND23,080 - 23,100 for bid and ask, respectively. Meanwhile, the spread between the USD selling and buying prices stays the same as in the normal period at VND70 - 80. 

On July 17, the central bank reduced the benmark rate by VND10 to VND22,643 from yesterday, indicating the USD selling price will be in range of VND21,964 to VND23,322. 

In the free market, the USD selling price is declining, standing at VND23,225 - 23,240, down VND35 for the selling price and VND60 for the buying price from a day earlier.

The most recent similar intervention by the SBV was in January 2017, with the aim of halting the free fall of the USD/VND exchange rate by increasing the USD buying price from VND22,300 to VND22,575, up VND275.

The SBV is reported to have purchased some US$11 billion in foreign currency since the start of this year, bringing its reserve fund to nearly US$64 billion now. The sum enhances the bank's confidence to intervene when needed.