Vietnam Dong Advances a Second Day After Trade Deficit Narrows

by lexie Wed Feb 08, 2012 2:30 pm

February 8, 2012

Vietnam Dong Advances a Second Day After Trade Deficit Narrows

Vietnam’s dong climbed for a second day on speculation demand for foreign currencies will weaken as the nation’s imports slow and the trade deficit narrows. Government bonds fell.

The country’s trade gap shrank to $100 million from a revised $269 million in December, as imports declined to $6.6 billion from $9.36 billion, according to preliminary data released Feb. 2 by the General Statistics Office in Hanoi.

“The trade deficit has been gradually narrowing in recent years,” researchers Tai Hui, Jennifer Kusuma and Thomas Harr at Standard Chartered Plc in Singapore wrote in a report today. That means “more support for the Vietnam dong, at least in the short term,” they wrote.

The currency rose 0.2 percent, to 20,913 as of 2:56 p.m. local time, headed for the strongest close since Jan. 30, according to prices from banks compiled by Bloomberg. The central bank fixed the reference rate at 20,828, unchanged since Dec. 26, according to its website. The currency is allowed to trade up to 1 percent on either side of the rate.

Standard Chartered raised its forecast for the exchange rate by the end of the year to 21,700 from 22,600.

In the so-called black market, the dong traded between 20,940 and 20,980 per dollar at gold shops in Hanoi today, compared with between 21,010 and 21,040 on Feb. 1, according to a telephone information service run by state-owned Vietnam Posts & Telecommunications.

The yield on benchmark five-year government bonds added two basis points, or 0.02 percentage point, to 12.37 percent today, according to a daily fixing from banks compiled by Bloomberg. (Bloomberg)

http://www.vietfinancenews.com/2012/02/vietnam-dong-advances-second-day-after.html