Vietnam devalues by one per cent as stronger greenback bites

HANOI - The State Bank of Vietnam devalued the VND by one per cent, its first currency adjustment in almost six months. The decision takes the official rate to 21,458/USD, as SBV has maintained its one per cent trading band. The move was in line with market expectations of weaker currency against general strength of the greenback.

ANZ Bank says it expects further devaluations by end-2015 with its foreign exchange strategists forecasting the VND to reach 22,050 by December.
Vietnam’s trade balance in 2014 posted a record surplus of USD1.98 billion. Vietnam has recorded annual trade surpluses in each of the past three years, supporting the current account surplus.
ANZ says that, combined with robust FDI flows, which reached a total of USD20.2 billion in new and additional registered FDI, the VND has proven to be one of the less vulnerable currencies in the region. “Nevertheless, we don’t expect the VND to be immune from the general strengthening of the greenback, especially when the US Federal Reserve starts its tightening cycle over the next 12 months,” ANZ says.  www.live.anz.com (ATI).