Central bank allows dong to slide against greenback

The State Bank of Vietnam sold the greenback at VND23,284 on Wednesday, down from VND23,050 last  Friday.

It fixed a central rate of VND22,654 on Wednesday compared to VND22,634 on Monday, and banks too sold dollars at higher rates, Vietcombank at VND23,250 and Eximbank at 23,260.

The higher dollar rates are likely to affect importers, according to industry insiders.

When the dong depreciates against the dollar, steel businesses have to pay higher prices for feedstock, a source from the Vietnam Steel Association, who asked not be named said.

“But it’s too early now to say how this weakening of the dong will affect steel firms.”

Economist Nguyen Tri Hieu said that import firms would continue to suffer because of a strong USD and he estimated it to strengthen by 1-3 percent this year against the Vietnamese currency.

But export businesses would enjoy the stronger dollar, he said.

They should seek to expand and take foreign currency loans since interest rates are currently low, he added.

The SBV said it allowed the dong to weaken against the greenback to keep the market stable.

Pham Thanh Ha, head of its monetary policy department, said the recent increase in the central bank’s dollar selling was to stabilize the market.

Its monetary policy would remain unchanged to control inflation and stabilize the economy, he said in a statement.