[Bloomberg Business, 7 May 2015] Bloomberg Business is reporting that Vietnam Devalues Dong for Second Time in 2015 to Aid Exports. The article by Nguyen Dieu Tu, Uyen Diep Ngoc and Pham Y-Sing Liau was published on 7 May 2015.

An edited extract appears below.

The State Bank of Vietnam devalued the dong for the second time this year in a bid to maintain export competitiveness and accelerate economic growth.

The central bank weakened its reference rate 1 percent to 21,673 dong a dollar, effective Thursday & may 2015, it said in a statement. The Vietnamese currency is allowed to trade as much as 1 percent either side of the fixing. The dong fell 0.1 percent to 21,673 as of 3:27 p.m. in Hanoi, according to data compiled by Bloomberg…

Vietnam recorded its slowest expansion in overseas sales in the the first four months of the year since 2010.

VND has declined 1.3 percent in 2015, putting the country’s exporters at a relative disadvantage to those in nations like Indonesia and Malaysia, whose currencies have fallen 5.7 percent and 2.9 percent, respectively.

Vietnam’s government bonds rallied after the devaluation. The yield on the five-year notes fell 17 basis points to 5.92 percent and that on the two-year securities dropped four basis points, or 0.04 percentage point, to 5.48 percent, according to daily fixings from banks compiled by Bloomberg. The country’s VN Index of stocks closed up 0.7 percent.

Growth Targets

The exchange rate was adjusted “to proactively implement social-economic development targets,” the central bank said in the statement. The currency was last devalued, also by 1 percent, on Jan. 7. Central bank Governor Nguyen Van Binh said in December that the regulator wouldn’t weaken the dong more than 2 percent in 2015.

The decision happened “slightly earlier,” than expected, Paul Mackel, head of global emerging markets foreign-exchange research at HSBC Holdings Plc in Hong Kong, wrote in a research note Thursday. “We don’t expect further policy moves from the State Bank of Vietnam this year.”

Vietnam’s government is targeting a 10 percent increase in exports in 2015 to help achieve economic growth of 6.2 percent, compared with expansion of 5.98 percent in 2014. Overseas sales rose 8.2 percent in the four months through April and the country recorded a trade shortfall of $3 billion over the period, government data show. Shipments from manufacturers such as Samsung Electronics Co. boosted Vietnam’s exports by 13.6 percent last year…

Vietnam’s inflation has remained below 1 percent in the first four months of 2015, slowing from 5.45 percent at the beginning of last year, official data show.