Bloomberg Business, 19 August 2015. Vietnam devalues dong for third time in 2015 on yuan fallout, by Nguyen Dieu Tu Uyen.
An edited extract of the original article appears below.
Vietnam devalued the dong for the third time this year and widened the currency’s trading band, the latest sign of stress in Asian exchange rates after China depreciated the yuan last week.
The State Bank of Vietnam weakened its reference rate by 1 percent to 21,890 dong a dollar and increased the scope for fluctuations to 3 percent on either side, after doubling the range on Aug. 12. The dong fell 1.2 percent to 22,360 as of 3:04 p.m. in Hanoi, extending its drop this month to 2.4 percent, according to data compiled by Bloomberg. Malaysia’s ringgit leads regional losses so far in August with a 6.4 percent slide.
Prime Minister Nguyen Tan Dung is seeking to safeguard export growth and the State Bank said it’s concerned about the prospect of the Federal Reserve raising interest rates. While the latest devaluation will allow the dong to weaken without pressuring the central bank to intervene, further policy measures can’t be ruled out should the yuan depreciate sharply, according to Australia & New Zealand Banking Group Ltd [ANZ is a Platinum Sponsor of AusCham].
“The policy action today is positive in its promptness in response to China’s devaluation,” Eugenia Fabon Victorino and Irene Cheung, analysts at Australia & New Zealand Banking Group Ltd., said in a research note. “As a preemptive move, the central bank may have taken into account a possible interest rate hike by the Fed in September.”
Vietnam’s government bonds fell, pushing the five-year yield to 6.74 percent, according to a daily fixing from banks compiled by Bloomberg. That’s the highest rate since July 2014…
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