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1.    Derivative Products provided by Vietinbank

+ Spot: Spot transaction is a transaction in which two parties are committed to buy and sell an amount of foreign currency at the spot rate of exchange and the settlement date could be negotiate but not more than 2 working days from trade date.

Advantages:

• To satisfy foreign exchange needs for importing goods, services, transport charges.
• To make a financial contribution into joint-venture foreign counterparties.
• To pay member fees to international organizations’ association.
• To pay expenses for going on overseas business, studying, medical treatment and traveling abroad.
• Value date could be TODAY, TOMORROW, or within two (2) working days.

Features:

• Spot rate will be the rate on the financial market at the time of exchange.
• Settlement will be within two (2) working days after trade date
• Satisfying many kinds of currency.

+ Forward:

Forward transaction is a transaction in which two parties are committed to buy and sell an amount of foreign currency at a certain rate of exchange and the settlement will be done in a certain time in future.

Advantages:

• To satisfy foreign exchange needs of commodities import-export settlement, for transferring foreign currencies
• To hedge customers’ income and expense against exchange rate fluctuation.

Features:

• Forward rate:
  • Forward rate of USDVND transaction is the rate calculated on spot rate in the trade date and the difference between VND basic interest rate of State Bank of Vietnam (on yearly basis) and the USD target interest rate of US Federal Reserve Bank.
  • Forward rate of VND against foreign currencies (except USD) transaction and forward rate between foreign currencies is based on the negotiation.
• Settlement date:
  • For the transaction between VND and foreign currencies, settlement date will be at least 3 days and at most 365 days after trade date.
  • For the transaction between foreign currencies, settlement date is based on the agreement between customer and Vietinbank.

+ Swap:

Swap transaction is a transaction in which two parties are committed to buy and sell a certain amount of foreign currency (this type of transaction involves 2 currencies only), terms of transaction are different and exchange rate will be determined at the signature of contract.

Advantages:

• To help import-export companies to manage their cash-flow effectively
• To use coming foreign currency flow immediately.
• To benefit by interest difference between foreign currencies.
• To hedge the exchange rate fluctuation affecting on income and expenses.

Features:

• There are 2 types of swap transaction:
  • Spot and Forward, or
  • Forward and Forward.
• Swap rates: there are 2 types of swap rates accordingly:
  • Spot rate and Forward rate, or
  • Forward rate and Forward rate.
• Payment dates are:
  • Spot payment and Forward payment, or
  • Forward payment and Forward payment.

+ Options:

Currency Option contract is a contract between buyer and seller of an option in which buyer has the right (but not the obligation) to buy or sell a certain currency amount at a predetermined exchange rate at or prior to a certain expiration date. If buyer chooses to exercise the right, seller has a duty to sell or buy that currency amount at a stated rate as specified in the contract.

Advantages:

• To hedge the risk of exchange rate fluctuation as well as to help customers to get profitable opportunities if exchange rate changes appropriately.
• Able to predetermine minimum fee (premium) of a Call Option or minimum profit of a Put Option.
• To provide customers with an acceptable rate.

Features:

• There are two style of option contracts:
  • European style Option: an option, in which buyer of an option can exercise its right on expiration date.
  • American style Option: an option, in which buyer of an option can exercise its right any time during its validity.
• Option term: 3 days to 365 days.
• Strike price: it is a predetermined rate which buyer could freely choose.
• Option premium: it represents a compensation buyer of an option must pay for right to exercise option.

2.    Documents:

• Customers in need of buying foreign currencies against VND have to present documents fully providing information on the purpose, quantity, type of payment, currency and term of settlement in accordance with FX control regulations of Vietnam Government, State Bank of Vietnam and Vietinbank.
• No documents required to certify the purpose of currency use in case of an option contract, a swap contract.

3.    Procedures: For more information, please contact:

                      Treasury Department, Vietnam Bank for Industry and Trade

                      Tel:  (84) - 4 - 39427584, 39421105

                      Fax: (84) - 4 - 39421043, 39421107

or any Foreign Exchange transaction Section of any nearest branch of Vietinbank.

4.    Eligible customers:

• Vietinbank provides various foreign exchange products for all economic entities operating in Vietnam, such as: Spot, Forward, Swap and Option transaction.
• Vietinbank also provides Spot, Forward, Option for individuals and other organizations operating in Vietnam.