Vietnam - Exchange rate changes likely as dong up

The Vietnamese dong currency is rising, so exchange rate adjustments may be in store, said economic experts of the National Institute for Finance at a conference in Hanoi last week.

According to analyses by experts, the dong has strengthened by 23.8% against the U.S. dollar and by 5.7% against the basket of currencies of the country’s major trading partners.

The exchange rate has stayed quite stable on the market as exporters have steadily sold the U.S. dollar to banks. The dong and dollar selling prices at times are on a par with or even lower than those set by the State Bank of Vietnam.

The greenback has been in decline against other currencies in recent years, leading to the lower rise of the dong against the basket of hard currencies.

However, according to experts, the pressure of stabilizing the exchange rate still remains a challenge for policymakers.

Inflation is seen falling towards the year-end given tight monetary and fiscal policies. The State Bank of Vietnam (SBV) may be forced to adjust the exchange rate slightly to support export, reduce trade deficit and improve the balance of payments and foreign reserves.

After the exchange rate was adjusted last February to make the dong drop by 8.5% against the U.S. dollar, the rate has been kept unchanged since then.

Saigon Times

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