February 10, 2010 11:25Vietnam To Devaluate Dong By 3.4% Thursday -Central Bank
HANOI - The State Bank of Vietnam, the country's central bank, said Wednesday that it will devalue the Vietnamese dong to VND18,544 per dollar Thursday from VND17,941.
"The average exchange rate to be applied for in the interbank market Thursday will be VND18,544," the central bank said in a statement.
The exchange rate is adjusted to balance supply and demand of foreign currencies, increase the liquidity of foreign exchange in the market, and help control the trade deficit and stabilize the macroeconomy, the statement added.
This will be the second devaluation of the Vietnamese dong in three months. The central bank shaved 5% off the value of the dong Nov. 27.
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HANOI, Feb 10 (AFP) - Vietnam's central bank said on Wednesday it was devaluing the dong for the second time since November, slashing its reference rate by more than 3 percent effective on Thursday.
The central bank also imposed a 1 percent ceiling on interest rates on dollar deposits at banks by "economic institutions", not including credit institutions, to try to flush more greenbacks into the system.
On Thursday, the dong's mid-point reference rate would be 18,544 per dollar, 3.36 percent down from the rate of 17,941 where the State Bank of Vietnam has kept the dong since Dec. 10.
The non-convertible Vietnamese currency is allowed to trade within a band of 3 percent on either side of the mid-point, although for more than a year it has traded beyond the weak end of the band on unofficial markets.
On Nov. 26 the central bank devalued the beleaguered dong by more than 5 percent and narrowed the band to 3 percent from 5 percent.
The devaluation announced on Wednesday was designed to help balance supply and demand of foreign exchange, increase the liquidity of foreign exchange in the market and contribute to controlling the trade deficit and stabilising the macroeconomy, the central bank said in a statement.
The dong has been under pressure for months, in part because of a shortage of dollars in the system, but also because of a widespread lack of confidence in the currency made worse by a widening trade deficit and expectations of high inflation.
