Black market for USD thrives despite ban

The recent crackdown on the unofficial trade of USD has had the unexpected effect of simply moving the points of trade.

Transactions on the roadside

Since the State Bank of Vietnam (SBV) has made moves to put a stop to unofficial market for foreign currencies, the trade has simply moved to other locations.
The demand for USD remains high, and those who are willing continue to find ways to profit from a surfeit of customers.
The unofficial foreign currency exchange rate is hovering about between VND19,800 and VND20,400 to buy, and between VND21,700 and VND21,900 or even VND22,000 to sell one USD.
In the meantime, the official rate is between VND20,870, and VND20,865, depending on whether you want to buy or sell.
An owner of one tea stand, who also deals in foreign currency, said, “Since the recent tightening of regulations, we have a third party make the transaction and bring the USD for our customers.”
This was on March 16, when she was selling USD at the price of VND21,700.
Other transactions are often carried out openly on the roadside. However, vendors have started to take some precautions since hearing about the recent bust, on March 8, of a large illegal transaction, amounting to USD400,000.
In addition to foreign currency exchange, these vendors trade in gold bars and jewelery.
Although the SBV has requested that commercial banks provide foreign currency exchange services to meet demand, this service does not seem to have been able to replace the black market.
Ms. Thu Huyen, of Giai Phong Street said, “I find it’s very difficult to buy USD to support my relative’s studies in Singapore. When I go to the gold shops on Ha Trung, they just say ‘no’. At the banks they require so many documents that it makes it nearly impossible.”
Nguyen Ba Hung finds himself in the same situation. He needed USD5,000 for debt settlement. But, despite several days trying to trade in his money at banks, he has failed to acquire the USD he needed.
Concerning this issue, a banking official said commercial banks can only sell USD to individuals who provide required documents. On the other hand they encourage customers to trade in their USD.
“It’a not that banks are running out of foreign currency, but our policy is to keep a reserve of these currencies for import and export reasons,” he said.