How much value will the dong lose this year?
24-08-2015 14:50:06+07:00
How much value will the dong lose this year?
Some international institutions have predicted that the dong will depreciate by 5 percent this year, while economists have urged the government to devalue the currency by more than 10 percent.
The dong/dollar exchange rate adjustment, according to ANZ, will help ease the pressure on the State Bank to intervene in the forex market.
However, according to the bank, even if Vietnam does not change its policies from now to the end of the year, the dong will still lose up to 5.1 percent of its value this year. The local currency has depreciated by 4.5 percent, after three exchange rate adjustments and widening of the forex trading band two times.
The real exchange rate in the interbank market, according to ANZ, is VND22,408 per dollar.
The bank noted that in the last two years, the dong only depreciated by 1.3 percent every year.
Standard Chartered and HSBC have also highly appreciated the State Bank’s move to devalue the dong by another 1 percent.
The central bank’s decision, in the eyes of Standard Chartered, shows its concern about the impact of the Chinese yuan devaluation. Standard Chartered believes that the latest adjustment is nearly equal to the 3 percent yuan devaluation.
As soon as the announcement about the exchange rate adjustment was released, dollar prices soared in both the official and black markets.
At noon on August 19, Vietcombank’s selling price soared to VND22,350-22,450 per dollar, or VND150 dong per dollar more expensive than earlier this morning and VND345 higher than the day before.
Meanwhile, the greenback was traded at VND22,450-22,550 per dollar at the gold shops on Ha Trung street in Hanoi.
However, HSBC has advised businesses not to rush to buy dollars at this moment, as the central bank has just made the exchange rate adjustment.
HSBC’s CEO Pham Hong Hai said he believes market stability will return thanks to the management body’s flexibility. In principle, after a spell of heavy fluctuations, the dollar price will stabilize at a new price level.
While the State Bank remains cautious with its exchange rate adjustments, economists have repeatedly urged to devalue the dong more sharply.
Dr. Nguyen Tri Hieu, a renowned economist, said it is necessary to reconsider the policy on maintaining the strong dong and that Vietnam should devalue the dong by 10 percent within two or three years.
Meanwhile, Nguyen Duc Thanh from VEPR says Vietnam should devalue the dong more sharply than the yuan devaluation.
