DECISION

PROMULGATING A NUMBER OF PROVISIONS RELATING TO FOREIGN CURRENCY TRANSACTIONS OF CREDIT INSTITUTIONS LICENSED TO DEAL IN FOREIGN CURRENCIES

THE STATE BANK GOVERNOR

Pursuant to December 12, 1997 State Bank Law No. 01/1997/QH10 and the December 12, 1997 Credit Institutions Law No. 02/1997/QH10;
Pursuant to the Government’s Decree No. 15/CP of March 2, 1993 on the tasks, powers and State management responsibilities of the ministries and ministerial-level agencies;
At the proposal of the director of the Department for Foreign Exchange Management,

DECIDES:

Article 1.- The general directors (directors) of credit institutions licensed to deal in foreign currencies shall be allowed to set Vietnam dong’s spot exchange rates against foreign currencies according to the following principles:

1. For US dollar: They must not exceed the amplitude ± 0.25% (zero point twenty-five percent) as compared to the average exchange rate on the inter-bank foreign currency market, announced by the State Bank on the nearest preceding transaction day.

2. For other foreign currencies: They shall be determined by the general directors (directors) of credit institutions licensed to deal in foreign currencies.

3. The difference between the buying rate and the selling rate shall be determined by the general directors (directors) of credit institutions licensed to deal in foreign currencies.

Article 2.- Credit institutions licensed to deal in foreign currencies shall be allowed to conduct forward and swap transactions only under the following terms:

1. The minimum term: 7 (seven) days as from the date of signing transaction contracts;

2. The maximum term: 180 (one hundred and eighty) days as from the date of signing transaction contracts.

Article 3.- The exchange rates for foreign exchange forward and swap transactions shall comply with the following principles:

1. For Vietnam dong-US dollar transactions: The maximum exchange rate applicable to each term must not exceed the ceiling spot exchange rate applicable at the time of signing contracts on forward or swap transactions (the average exchange rate on the inter-bank foreign currency market announced by the State Bank plus 0.25%) plus the permitted incremental rate (a certain percentage of the ceiling spot exchange rate) prescribed for each specific term as follows:

- For the term of between 7 and 30 days: 0.5%;

- For the term of between 31 and 60 days: 1.2%;

- For the term of between 61 and 90 days: 1.5%;

- For the term of between 91 and 180 days: 2.5%.

2. For transactions involving other foreign currencies: They shall be determined by the general directors (directors) of credit institutions licensed to deal in foreign currencies.

Article 4.- Credit institutions shall collect transaction charges according to current regulations of the State Bank.

Article 5.- This Decision takes effect after its signing and replaces the following documents: Decision No. 65/1999/QD-NHNN7 of February 25, 1999 of the State Bank Governor prescribing the principles for determining foreign currency selling and buying rates of credit institutions licensed to deal in foreign currencies, Decision No. 289/2000/QD-NHNN7 of August 30, 2000 of the State Bank Governor amending Clause 1, Article 2 of Decision No. 65/1999/QD-NHNN7 of February 25, 1999, and Decision No. 1198/2001/QD-NHNN of September 18, 2001 of the State Bank Governor amending a number of provisions relating to forward and swap transactions of credit institutions licensed to deal in foreign currencies.

The previous regulations which are contrary to the provisions in this Decision are hereby all annulled.

Article 6.- The director of the Office, the director of the Department for Foreign Exchange Management, the heads of units under the Central State Bank, the directors of the State Bank’s provincial/municipal branches, and the chairmen of the Management Boards and the general directors (directors) of credit institutions licensed to deal in foreign currencies shall have to implement this Decision.