Hanoi (VNA)🐈 - Domestic firms have taken the first measures in an effort to adapt to the State Bank of Vietnam (SBV)’s new regulation on tightening foreign currency credit.

Under Circular 24/2015/TT-NHNN, commercial banks are no longer allowed to provide lending in foreign currency to firms which do not need it for offshore payments since March 31 this year. The tightening in foreign currency credit is aimed to step up the central bank’s anti-dollarisation drive. SBV said that the new regulation affects only those firms which often obtain foreign currency loans from banks and will later convert them into dong to fund their domestic production. The new rules on foreign currency loans are expected to stabilise exchange rates and strengthen the dong. However, it also has side effects on firms, especially agriculture and seafood exporters, which often take loans in foreign currencies to meet their great funding demand. Banking expert Nguyen Tri Hieu estimated that without foreign currency loans, interest rates for which were often roughly 6 percent to 9 percent lower than that of the dong, input costs could increase for exporters. To adapt with the new rule, many exporters have paid more attention to the movement of the dong - US dollar exchange rate. They are even hunting for high ranking personnel specialising in finance and foreign exchange. Previously, only FDI firms were interested in such activities. A high-ranking official of an HMC City-based human resources consulting company, who declined to be named, said that her company had received urgent orders from five major domestic companies to recruit senior personnel in finance and capital resources. Recruitment positions are required to have experience in finance, foreign exchange, capital resources management and structured products. The executive, with nearly 20 years of experience in finance and human resources, forecast that this was only the beginning of the ‘thirst’ for senior personnel to service transactions of firms in foreign currency derivatives and interest rates besides normal forward transactions currently. Besides, banking experts said that the exporters had also paid more attention to insurance services of exchange rate and interest rate. Bidding demand of firms for dollar forward contracts surged sharply against early this year, they said. Representatives from Sacombank and Maritime Bank told Nhip cau dau tu (Bridge for Investment) newspaper that more firms had been interested in financial products. Bids for interest rate swap (IRS), forward rate agreement (FRA), or interest rate option (IRO) products in the inter-bank market, were heating up due to rising consultancy demands from firms. To offset the capital source that was previously transferred from foreign currency loans, some major listed companies are also preparing plans to call for new funds or issue corporate bonds in wake of the tightening of foreign currency credit and the high dong lending interest rate.-VNA