What are the regulations on currencies and exchange rates in Vietnam?
What are the regulations on currencies and exchange rates in Vietnam?
Pursuant to Article 5 of Circular 02/2021/TT-NHNN stipulating the currencies and exchange rates as follows:
- Each authorized credit institution shall stipulate the foreign currencies to be traded.
- The spot exchange rate between VND and USD of an FX spot or FX spot within a currency swap shall be determined based on the official rate announced by the State Bank on the transaction date and within the margin decided by the State Bank.
- The forward rate between VND and USD in an FX forward or an FX forward within a currency swap shall be agreed upon by the parties thereto but not exceed the exchange rate determined based on:
+ The spot exchange rate on the transaction date;
+ The difference between two existing interest rates which are the refinancing interest rate announced by the State Bank and Federal Funds Target Rate. If the Federal Funds Target Rate is within the margin, the lowest interest rate in the margin shall apply.
+ Term of the transaction.
- Exchange rates between VND and other currencies other than USD and between foreign currencies with each other in foreign currency transactions shall be agreed upon by the parties thereto.
- Authorized credit institutions must publish spot exchange rates between VND and other currencies when making transactions with clients at their foreign currency transaction locations and on their official websites (if any). Authorized credit institutions shall make transactions with their clients at published exchange rates, unless otherwise agreed upon by both parties.
What are the regulations on currencies and exchange rates in Vietnam? (Image from the Internet)
What are the responsibilities of units under the State Bank of Vietnam related to foreign currency transactions?
Pursuant to Article 20 of Circular 02/2021/TT-NHNN stipulating the responsibilities of units under the State Bank of Vietnam related to foreign currency transactions as follows:
- Monetary Policy Department shall take charge of handling issues related to foreign currency transactions that arise during the implementation of this Circular.
- Banking Supervision Agency; and State Bank branches of provinces and central-affiliated cities shall:
+ Inspect and supervise compliance with regulations of this Circular and handle violations as per the law;
+ Notify the Monetary Policy Department of issuance of establishment and operation licenses, decisions on amendments to establishment and operation licenses, written permissions for foreign currency transactions, and other documents about foreign currency transactions issued by the State Bank to branches of foreign banks and credit institutions.
What are the responsibilities of authorized credit institutions related to foreign currency transactions in Vietnam?
Pursuant to Article 18 of Circular 02/2021/TT-NHNN stipulating the responsibilities of authorized credit institutions related to foreign currency transactions as follows:
- Promulgate internal regulations on procedures for making foreign currency transactions in compliance with regulations of this Circular and relevant regulations of law. To be specific:
+ Specify responsibilities and powers of relevant individuals and units when making foreign currency transactions, ensuring compliance with regulations on internal control systems of commercial banks and branches of foreign banks;
+ Divide functions and tasks between the transaction unit and transaction support unit concerning transactions with other authorized credit institution, ensuring the participation of these units in the confirmation and making of each foreign currency transaction.
- Promulgate internal regulations on risk management in foreign currency transactions in compliance with regulations of the State Bank and relevant legislative documents.
- Provide clients with instructions on compliance with regulations of this Circular and other relevant regulations on foreign exchange management when providing foreign exchange services and making foreign currency transactions with clients.
- Inspect, consider and retain client’s documents as appropriate to actual transactions to ensure that foreign currency transactions are carried out for the intended purpose and in accordance with regulations of law on foreign exchange management.
- Report on foreign currency transactions according to statistical and reporting regulations of the State Bank.
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