Vietnamese currency falls to new low against dollar
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Vietnam has set its reference rate for the Vietnamese dong at a record low as the greenback strengthens globally amid economic uncertainty.
The State Bank of Vietnam (SBV) on Thursday set the reference rate for the Vietnamese dong at VND23,281, the weakest since at least 2005, according to data compiled.
At commercial banks, the Vietnamese dong is now at its lowest since March 2020 after having declined by around 3.5% in the year-to-date.
Vietcombank, the country’s largest lender, had sold the U.S. dollar for VND23,740. Top private player Techcombank’s rates were VND23,708, while that of Sacombank were VND23,950.
But an expert forecasts the Vietnamese dong to decline further to VND24,000 a U.S. dollar.
“The dong is too strong at the moment for an export-oriented economy,” Trinh Nguyen, a senior economist at Natixis SA in Hong Kong, told Bloomberg.
“That said, they care about imports and inflation so won’t allow excessive depreciation.”
The SBV allows the Vietnamese dong to trade within a band of 3% on either side of the reference rate, which is based on eight currencies and set daily.
Questions & Answers
Q.What is the new reference rate set by the State Bank of Vietnam?
What is the new reference rate set by the State Bank of Vietnam?
The State Bank of Vietnam set the reference rate for the Vietnamese dong at VND23,281. This is its weakest point since at least 2005, reflecting the global strengthening of the U.S. Dollar.
Q.How much has the Vietnamese dong fallen this year at commercial banks?
How much has the Vietnamese dong fallen this year at commercial banks?
At commercial banks, the Vietnamese dong has fallen by about 3.5% in the year-to-date. It is now at its lowest value against the U.S. Dollar since March 2020.
Q.Why would an expert suggest the dong is currently too strong?
Why would an expert suggest the dong is currently too strong?
An expert suggests the dong is too strong for an export-oriented economy, despite its recent fall. However, the expert also noted the SBV cares about imports and inflation, limiting excessive depreciation.
Q.What is the allowed trading band for the Vietnamese dong?
What is the allowed trading band for the Vietnamese dong?
The State Bank of Vietnam permits the Vietnamese dong to trade within a 3% band around its daily reference rate. This reference rate is calculated using a basket of eight different currencies.
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