New regulation on foreign curreny trading

Laws - The Governor of the State Bank of Vietnam (SBV) has just issued Circular No.26/2009/TT-NHNN on foreign currency trading of several state-owned economic groups and general corporations in line with Document No.2578/TTg-KTTH of the Prime Minister dated December 23, 2009.

Following are the main points of the Circular:

- The Circular governs seven state-owned economic groups and general corporations, including their subsidiaries with the state capital of above 50% in line with the Law on Enterprises in 2005, and non –credit institutions (referred to as economic institutions) and forex-licensed credit institutions. Accordingly, these economic institutions are responsible for selling foreign currencies to forex-licensed credit institutions and have the right to purchase foreign currencies with the same amount of their sold foreign currencies for proper use.

- The foreign currencies sold to credit institutions includes: (i) foreign currencies in the demand and time accounts of institutions with credit institutions on December 31, 2009; and (ii) current revenues of institutions from January 1, 2010.

- The principles, procedures and processes of purchasing foreign currencies between credit institutions and economic institutions are classified as follows: (i) Purchasing foreign currencies from the balance of time accounts; (ii) Purchasing foreign currency from the balance of demand accounts, and (iii) Purchasing foreign currencies from current revenues from January 1, 2010.

- The Circular stipulates the role of the SBV in handling the forex trading between credit institutions and economic institutions, including the trading between the SBV and credit institutions in regard to the amount of foreign currencies purchased by credit institutions from the economic institutions.