Vietnam’s Dong Declines as Central Bank Lowers Reference Rate

October 5, 2011



Vietnam’s Dong Declines as Central Bank Lowers Reference Rate

Vietnam’s dong fell as the central bank lowered its daily reference rate for the first time since August. Government bonds were little changed.

The State Bank of Vietnam fixed the reference at 20,638 per dollar, compared with 20,628 yesterday, according to its website. It last adjusted the measure on Aug. 24. The dong is allowed to trade up to 1 percent on either side of the rate and it can move outside the band on the so-called black market. The currency also dropped on speculation companies stepped up dollar purchases to pay for imports and redeem overseas debt.


“Dollar demand has increased recently because many companies are preparing to pay their dollar loans which come due,” said Nguyen Tan Thang, the head of fixed-income research at Ho Chi Minh City Securities Corp. “Also, some firms are speeding up purchases of dollars to import gold to meet local demand.”


The dong dropped 0.2 percent to 20,850 per dollar as of 3 p.m. in Hanoi, the weakest level in four days, according to prices from banks compiled by Bloomberg.


The currency also fell in the black market, trading at as low as 21,480 per dollar at gold shops in Hanoi, compared with 21,470 yesterday, according to a telephone information service, known as 1080, run by state-owned Vietnam Posts & Telecommunications.


The yield on the benchmark five-year government note was at 12.396 percent, compared with 12.392 yesterday, according to a daily fixing price from banks and compiled by Bloomberg. (Bloomberg)


http://www.vietfinancenews.com/2011/10/vietnams-dong-declines-as-central-bank.html