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Vietnam: Central Bank Currency Regulation Issued

(Nov. 3, 2015) On October 2, 2105, the State Bank of Vietnam issued Circular No. 15/2015/TT-NHNN, on foreign currency transactions at credit institutions. The goal of the Circular, which went into effect on October 5, is to limit speculation in and hoarding of U.S. dollars and other foreign currencies. (Central Bank to Tighten Management of Foreign Currency Transactions, VIETNAM LAW & LEGAL FORUM (updated Oct. 8, 2015).)

The Circular specifies that banks can only sell foreign currencies to businesses that need to use those currencies to make payments within two days; these transactions are considered “spot sales.” Forward currency sales, also known as currency futures contracts, can be sold for a maximum term of 365 days. During the transaction term, the exchange rate between Vietnam’s dong and the U.S. dollar will be set by agreement between the parties, but cannot be more than the spot exchange rate on the day the transaction is established. (Id.) Companies will not be able to purchase foreign currency and store it for future use. (Id.)

Credit institutions may conduct various forms of currency transactions with each other, but for transactions for individual clients, the credit institutions must examine and store documents establishing the purpose of the transaction. The institutions are not permitted to charge fees for foreign currency transactions. (Id.)

Background

Vietnam has other restrictions on foreign currency usage currently in place. Under Circular 32/2013/TT-NHNN issued by the State Bank of Vietnam, almost all transactions that take place in the country must be conducted in the national, not foreign, currency. That Circular came into effect on February 10, 2014. (Restrictions on Foreign Currency Tightened, VIET NAM NEWS (Jan. 3, 2014).)

On November 11, 2014, the State Bank issued an additional Circular, No. 31/2014/TT-NHNN, in force from December 26, 2014, under which international online transactions valued at more than US$1,000 must be reported to the anti-money laundering office of the Bank. The Circular also required all transactions in foreign currencies worth more than VND500 million (at that time about US$23,300) to be reported to the same office of the Bank. (SBV Tightens Rules for Online Foreign Currency Transactions, VIET NAM NEWS (Nov. 15, 2014).)