Vietnam forced to readjust dong-dollar rate again

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dong dollarThe Vietnamese central bank on August 7 increased the dollar’s buying price to 21,100 dong from 20,826 dong it had maintained since late June 2013, asserting there it would not repeat any devaluation. However, the bank at the last devaluation also said that it has “no intention of further devaluing the dong” and will take “whatever measures are necessary” to strengthen it, including reigning in the gold market.

The greenback’s selling price has been kept at the ceiling level of 21,246 dong per dollar.

The latest adjustment comes after the monetary authority weakened its dong reference rate by 1 per cent to 21,036 per dollar on June 28 to support exports and help revive an economy that grew last year at its slowest pace since at least 2006. The currency is allowed to diverge by 1 per cent from the benchmark rate, which had, prior to the latest devaluation in June, been set at 20,828 since December 2011.

The Vietnamese central bank can increase the dollar’s buying price to be able to purchase big volumes and bolster foreign exchange reserves. It is also the country’s sole gold buyer.

At commercial banks, the exchange rate stood at 21,040-21,060 dong per dollar as of August 9. However, the street rate can go up to 22,000 dong per dollar. Economists say that if the exchange rate in the black market increases further, the central bank will need big foreign currency reserves to intervene.

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The Vietnamese central bank on August 7 increased the dollar’s buying price to 21,100 dong from 20,826 dong it had maintained since late June 2013, asserting there it would not repeat any devaluation. However, the bank at the last devaluation also said that it has “no intention of further devaluing the dong” and will take “whatever measures are necessary” to strengthen it, including reigning in the gold market.

Reading Time: 1 minute

dong dollarThe Vietnamese central bank on August 7 increased the dollar’s buying price to 21,100 dong from 20,826 dong it had maintained since late June 2013, asserting there it would not repeat any devaluation. However, the bank at the last devaluation also said that it has “no intention of further devaluing the dong” and will take “whatever measures are necessary” to strengthen it, including reigning in the gold market.

The greenback’s selling price has been kept at the ceiling level of 21,246 dong per dollar.

The latest adjustment comes after the monetary authority weakened its dong reference rate by 1 per cent to 21,036 per dollar on June 28 to support exports and help revive an economy that grew last year at its slowest pace since at least 2006. The currency is allowed to diverge by 1 per cent from the benchmark rate, which had, prior to the latest devaluation in June, been set at 20,828 since December 2011.

The Vietnamese central bank can increase the dollar’s buying price to be able to purchase big volumes and bolster foreign exchange reserves. It is also the country’s sole gold buyer.

At commercial banks, the exchange rate stood at 21,040-21,060 dong per dollar as of August 9. However, the street rate can go up to 22,000 dong per dollar. Economists say that if the exchange rate in the black market increases further, the central bank will need big foreign currency reserves to intervene.

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