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Dong declines on fears policy makers may seek weaker currency
The dong saw its biggest drop in a month on concern policy makers will widen the daily trading band and allow a weaker currency to support exports.
The currency traded near the lowest level in a month as Morgan Stanley this week said the dong may be devalued next year because of a widening trade gap, bad loans at local banks and the external debt owed by the government. The central bank last month expanded the dong’s trading band to 3 percent on either side of a fixed rate, from an earlier 2 percent.
“Investors are concerned about recent comments that the dong will weaken in the next few months so people want to hold on to dollars,” Vu Anh Duc, a senior dealer in the fixed-income department at Hanoi-based Vietnam Bank for Industry and Trade, known as VietinBank, said.
The dong declined 0.2 percent, the most since November 7, to VND16,983 per dollar as of 3:30 p.m. in Hanoi, according to data compiled by Bloomberg.
The State Bank of Vietnam fixed Thursday’s reference rate at VND16,489 per dollar, versus VND16,491 on Wednesday, according to the bank’s website.
Authorities may widen the band further to 5 percent to support exports, Duc said.
Bloomberg
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