Vietnam Dong Hits 16-month High on Dollar Surplus
The State Bank of Vietnam (SBV), or the central bank, let the dong currency rise to VND16,025 against U.S. dollar March 10, the highest level over the past 16 months.
It followed strong dollar inflow fueled by a jump in actual foreign investment and a decision made by the SBV on expanding intraday USD/VND trading band.
The band for the U.S. dollar against the dong in the inter-banking market has widened to +/-1% from +/-0.75% from March 10.
Based on the new band, the upper limit on March 10 for the dong would be VND15,865 per U.S. dollar in the inter-bank markets.
The official exchange rate was last higher on October 13, 2006 when it reached VN16,021 per dollar.
Vietnam had until recently pursued a policy of keeping the dong on a weakening path versus the dollar to protect export competitiveness.
Foreign investors disbursed another $1 billion during the first two months of this year, or 57% higher than the same period earlier, according to the Ministry of Planning and Investment.
The U.S. dollar's value has fallen as banks in Vietnam have been facing a shortage of dong following measures by the central bank to dry up liquidity to fight double-digit inflation.
The tightening prompted banks to preserve their dong holdings and curb lending while forcing many businesses to change dollars for dong outside of the banking system. (Young People)
Vietnamese
