In the Vietnamese Territory, the use of foreign exchange is strictly regulated for the management of Foreign Exchange in the Vietnamese territory and All transactions, payments, listings, advertisements, quotations, valuations and agreements. Can other forms of residency be done in foreign exchange? So about the matter “New things on the use of foreign currencies in Vietnam” Let’s find out with LSX in the article below.
Legal grounds
- Law on credit institutions 2010 amended and supplemented in 2017
- Ordinance on foreign exchange in 2005 amended and supplemented in 2013
- Decree 70/2014/ND-CP detailing the implementation of a number of articles of the Ordinance on Foreign Exchange
- Decree 89/2016/ND-CP on conditions for foreign currency exchange agents and foreign currency payment receipt services 2016
- Circular 07/2012/TT-NHNN regulating foreign currency status of credit institutions
- Circular 15/2015/TT-NHNN on foreign currency transactions credit institutions are allowed to operate foreign exchange
What is foreign currency?
Foreign currency is the currency of another country, territory or the common currency of the European Union and other common currency used in international and regional payments (Clause 1, Article 2 of Circular 07/2012/TT-NHNN). .
In fact, trade often attaches importance to strong foreign currencies, which are widely used in international transactions, have high conversion value and are less affected by the exchange rate of other currencies. Some of the world’s most commonly recognized hard currencies for a long time are USD (US Dollar), EURO (European Currency), GBP (British Pound), CAD (Canadian Dollar), CHF ( Swiss franc), YJP (Japanese Yen).
By 2019, there are 26 countries with a currency called the dollar, in which the USD is the most popular.
The foreign exchange market is where the trading of foreign currencies takes place. The foreign currency market of Vietnam includes the interbank foreign currency market and the foreign currency market between banks and customers. (Clause 18, Article 4 of the Ordinance on Foreign Exchange 2005)
Residents may purchase foreign currencies at credit institutions to pay for imported goods and services; to transfer and bring foreign currency abroad to serve lawful needs; to pay the principal, interest and related fees of foreign loans: (Clause 1, Article 7, Clause 3, Article 8, Article 17 of the Ordinance on Foreign Exchange 2005).
What is the exchange rate?
The exchange rate (rate) between currencies is the most important issue in foreign currency transactions, which is regulated by law as follows:
First, the exchange rate of the Vietnamese dong is the price of one foreign currency unit in terms of the Vietnamese currency. (Clause 5, Article 6 of Law on State Bank of Vietnam)
Second, the exchange rate of the Vietnamese dong is formed on the basis of foreign currency supply and demand in the market regulated by the State. The State Bank of Vietnam announces the exchange rate, decides on the exchange rate regime, the exchange rate management mechanism, through the use of monetary policy tools and implements the intervention plan in the market.
Third, the exchange rate regime of the Vietnamese dong is a managed floating exchange rate regime determined by the State Bank of Vietnam on the basis of a basket of currencies of countries having commercial, borrowing and paying relations to debt and investment with Vietnam in line with macroeconomic objectives in each period. (Article 15 Decree 70/2014/ND-CP)
Since 2016, the State Bank of Vietnam has administered the exchange rate policy by publishing the “Central Rate” daily on the website of the State Bank. “Central rate of Vietnam Dong to US Dollar”, is the average exchange rate on the interbank foreign currency market of Vietnam Dong to US Dollar, determined on the basis of reference to exchange rate movements, weighted average prices on the inter-bank foreign currency market, exchange rate movements in the international market of a number of currencies of countries having large trade, borrowing, debt repayment and investment relations with Vietnam.
New things on the use of foreign currencies in Vietnam
The State strictly regulates foreign exchange activities in general, and foreign currency exchange and trading activities in particular in order to “realize the goal of using only Vietnamese dong in the territory of Vietnam. (Article 3 of the Ordinance on Foreign Exchange in 2005 amended and supplemented in 2017).
What is foreign currency trading?
Foreign currency transactions (also known as foreign exchange transactions) include: transactions of buying and selling foreign currencies on the spot; transaction of buying and selling foreign currency forwards; currency swaps and options to buy and sell foreign currencies. In which, spot purchase and sale of foreign currency is a transaction where two parties buy and sell together a quantity of foreign currency with Vietnam Dong or with another foreign currency at the spot exchange rate determined at the transaction date. (Clause 5, 6, Article 2 of Circular 15/2015/TT-NHNN)
Buying and selling spot foreign currency is a basic foreign exchange activity of banks and financial companies licensed to operate foreign exchange. Other entities may purchase foreign currency according to the following provisions:
First, residents may purchase foreign currencies at credit institutions to pay for imported goods and services;
Second, residents and non-residents may purchase foreign currencies to transfer or bring foreign currencies abroad to serve lawful needs;
Third, Vietnamese citizens are allowed to buy foreign currency in cash at a credit institution to meet the spending needs of themselves and children sharing passports with their parents, including food, expenses, and transportation abroad related to the purposes of study, medical treatment, work, tourism, visit abroad.
Vietnamese citizens are only allowed to buy foreign currencies in cash at credit institutions authorized to sell foreign currencies (not at foreign currency exchange agents). Credit institutions are obliged to sell 100 USD/person/day (or other foreign currencies of equivalent value) within a period of stay abroad of 10 days, on the basis of documents and documents presented. In case of self-balancing foreign currency in cash, credit institutions may sell in excess of this regulation;
Fourth, individuals holding passports issued by competent foreign agencies may purchase foreign currency from foreign currency exchange agents located in an isolation area at international border gates.
Fifth, foreign investors are allowed to buy foreign currency at credit institutions to transfer abroad (Decree 70/2014/ND-CP).
For the sale of foreign currency in cash by individuals, it can only be done at locations authorized to buy foreign currencies of credit institutions and foreign currency exchange agents of credit institutions.
What is currency exchange?
Since it is an exchange between two currencies, the exchange is also known as a foreign exchange. Therefore, the regulation on foreign currency exchange agents, but the content is that the agent buys foreign currency of the customer (except for the foreign currency exchange agent at the international border gate, he also sells foreign currency to the customer).
The law stipulates that foreign currency exchange can only be done at credit institutions that are licensed to do business in and provide foreign exchange services and at foreign currency exchange agents that have been granted a certificate of agent registration by the State Bank. (Decree 89/2016/ND-CP)
Economic organizations are only permitted to conduct foreign currency exchange agency activities when they fully satisfy the conditions prescribed by law regarding the location of the foreign currency exchange agent, facilities, staff, professional processes, etc. service and is accepted to act as a foreign currency exchange agent for a credit institution. (Article 4 of Decree 89/2016/ND-CP)
For the receipt and payment of foreign currencies, it is only possible to make payments at credit institutions licensed to do business in and provide foreign exchange services and economic organizations approved by the State Bank to conduct direct operations, receiving and paying, paying foreign currency.
Economic organizations may be considered and approved to directly receive, pay and pay foreign currencies if they satisfy the conditions prescribed by law regarding equipment and facilities, and contract with partners abroad, plans to perform foreign currency receipt and payment services. (Article 5 Decree 89/2016/ND-CP)
Economic organizations are considered and approved by the State Bank of Vietnam to register foreign currency payment and payment agents when they satisfy the conditions for equipment and facilities and are authorized by credit institutions to do so. (Clause 1, Article 6 of Decree 89/2016/ND-CP)
Foreign currency exchange agents must sell all purchased foreign currencies (besides the remaining foreign currency balance not exceeding USD 2,000, except for special cases) to the credit institution at the end of each working day, in case about long distance, difficult to travel, it is not more than 07 working days. At the same time, the foreign currency exchange agent must publicly post up the exchange rate of buying foreign currency in cash with Vietnam dong at the place where the agent is located and make foreign currency purchases with customers according to the posted exchange rate.
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Frequently asked questions
Penalties for domestic debt repayment in foreign currency?
Pursuant to the provisions of Clause 6, Article 23 of Decree 88/2019/ND-CP, the act of paying domestic debt in foreign currency against the law will be subject to a fine of between VND 100 million and VND 150 million.
A fine ranging from VND 100,000,000 to VND 150,000,000 shall be imposed for one of the following violations:
a) Providing credit or repaying domestic debt in foreign currency in contravention of law, except for the case specified in Article 14 of this Decree;
b) Failing to sell the collected foreign currency to credit institutions as prescribed by law, except for the case specified at Point b, Clause 5 of this Article.
In Article 13 of Decree 70/2014/ND-CP guiding the Ordinance on Foreign Exchange and the Ordinance on Foreign Exchange amending regulations on the use of cash in foreign currencies by individuals as follows:
Residents and non-residents being individuals with cash in foreign currencies are entitled to keep, carry with them, give, donate, inherit, sell to authorized credit institutions, transfer or bring abroad according to their laws and regulations. the provisions of this Decree, payment to entities permitted to collect foreign currency in cash.
Residents being Vietnamese citizens may use foreign currency cash to deposit foreign currency savings at authorized credit institutions, and may withdraw principal and interest in the deposited currency.
Accordingly, you can buy, store or save foreign currency at credit institutions authorized to trade in foreign currencies. However, you should also note: Current law does not allow the use of foreign currency when performing civil transactions between individuals in Vietnam.
First, you go to an authorized organization and provide documents verifying personal information, documents proving the reason for buying foreign currency (if any) to make the purchase and save foreign currency. Because each credit institution will have different policies on the process, procedures and necessary documents to set up an account and deposit savings or deposit money in the account, you need to refer to the specific application form. The credit institution you want to save for for specific and accurate instructions.
Conclusion: So the above is New things on the use of foreign currencies in Vietnam. Hopefully with this article can help you in life, please always follow and read our good articles on the website: lsxlawfirm.com
