Official Dispatch No. 767-CV/NHNN7 dated August 24, 1998 of the State Bank on foreign currencies buying and selling at credit institutions that are permitted to trade in foreign currencies

To:General Managers

Managers of commercial banks permitted to engage in foreign currency business , with the view to seriously implementing of the current provisions of the foreign exchange control on the foreign exchange spot, forward and swap transactions with customers, the State Bank of Vietnam requests the Directors General (Directors) of foreign currency authorised credit institutions to guide the foreign currency purchase and sale with customers as follows:

1. For the buying and selling exchange rates:

- Strict compliance with the buying and selling exchange rates within the bands stipulated by the Governor of the State Bank as mentioned in the Decision No.267/QD-NHNN7 dated 6 August, 1998. The application of forward rates to spot transactions is strictly prohibited.

- It is absolutely prohibited to take advantage of the difference between the spot rates and forward rates to generate profit in any form, including the forward contracting without delivery in order to benefit solely from the exchange rates difference.

2. For the sale of foreign currency to customers

Foreign currency sold to customers in a spot transaction is for paying the due debts (payment of import bill and other services to foreign countries, to the export entrusting organisation and import trusted organisation, repayment of bank loans and foreign debts..) The sale of foreign currency in a spot transaction to customers who do not have an immediate requirement to make payment is prohibited.

When selling foreign currency to customers, banks shall have to exercise close control over the necessary documents relating to the payments to be made (as provided for in paragraph 2 of Circular No. 203-NH/TT dated 31 October 1991 of the State Bank guiding the implementation of the Decision No. 337-HDBT dated 25 October, 1991 of the Council of Ministers on some measures to control foreign exchange in the immediate future).

For the sale of foreign currency to enterprises to repay foreign debts, in addition to the control of the valid documents as mentioned above, it is ensure that the debt is in line with the progress and schedule of repayments registered with and approved by the State Bank.

For the foreign currency forward transaction: in addition to the control of the completeness and validity of the file and documents, banks shall ensure that the foreign currency buying date corresponds to the date of repayment.

Foreign currency authorised credit institutions shall strictly implement the requirements mentioned in this Document. In the process of implementation, if there is any difficulty or obstacle arising, credit institutions shall report immediately to the State Bank (foreign exchange control Department) for a prompt solution.