Dong goes limb after Vietnam government interventions
The Vietnamese government for the first time since 2011 devalued the country’s currency, the dong, to “help improve the balance of payments and boost foreign-exchange reserves.” It also cut the interest rate cap on dollar deposits at Vietnamese banks.
A statement on the State Bank of Vietnam’s website says that from June 28 the dollar will buy 21,036 dong, which is a devaluation of 1 per cent from the previous official rate of 20,828 dong per dollar. The currency, which is allowed to trade as much as 1 per cent either side of the rate, fell a further 0.9 per cent after the announcement.
The reference rate’s adjustment is “to more accurately reflect the supply and demand of foreign currency in the market” and to “create stability,” the central bank said in the statement.
Vietnam is currently struggling with a sluggish economy and slow GDP growth, huge debt piles in its state-owned banks and the economic dominance of inefficient state companies. Vietnam’s economy expanded 5 per cent in 2012, the slowest since 1999, after growing 5.9 per cent in 2011 and 6.8 per cent in 2010.
However, latest GDP data indicated that the slowdown could be bottoming out.
The Vietnamese government for the first time since 2011 devalued the country's currency, the dong, to "help improve the balance of payments and boost foreign-exchange reserves." It also cut the interest rate cap on dollar deposits at Vietnamese banks. A statement on the State Bank of Vietnam's website says that from June 28 the dollar will buy 21,036 dong, which is a devaluation of 1 per cent from the previous official rate of 20,828 dong per dollar. The currency, which is allowed to trade as much as 1 per cent either side of the rate, fell a further 0.9 per...
The Vietnamese government for the first time since 2011 devalued the country’s currency, the dong, to “help improve the balance of payments and boost foreign-exchange reserves.” It also cut the interest rate cap on dollar deposits at Vietnamese banks.
A statement on the State Bank of Vietnam’s website says that from June 28 the dollar will buy 21,036 dong, which is a devaluation of 1 per cent from the previous official rate of 20,828 dong per dollar. The currency, which is allowed to trade as much as 1 per cent either side of the rate, fell a further 0.9 per cent after the announcement.
The reference rate’s adjustment is “to more accurately reflect the supply and demand of foreign currency in the market” and to “create stability,” the central bank said in the statement.
Vietnam is currently struggling with a sluggish economy and slow GDP growth, huge debt piles in its state-owned banks and the economic dominance of inefficient state companies. Vietnam’s economy expanded 5 per cent in 2012, the slowest since 1999, after growing 5.9 per cent in 2011 and 6.8 per cent in 2010.
However, latest GDP data indicated that the slowdown could be bottoming out.
