Posted on 11/25/2009 9:22:18 PM PST by lainie
Vietnam devalued its currency by 5.4 per cent against the dollar yesterday and raised interest rates by a full percentage point in an effort to cut inflation and underpin the beleaguered dong.
The dong has come under pressure recently as inflation started climbing and domestic demand, driven by the country's $8bn stimulus programme, drove the current account deficit to close to $2bn a month.
It was trading on the grey market at 19,800 to the dollar on Tuesday but came back to 19,500 after the government move.
Analysts, however, questioned whether financial markets would believe the latest move had put a floor under the dong.
"The decision poses further challenges to the central bank's credibility," said Tai Hui, Standard Chartered Bank economist. "The risk is that local investors will pay little attention to official comments going forward, which may exacerbate devaluation pressure on the currency."
For weeks, the government had insisted that it would not give in to pressure on the dong. "Vietnam will not devalue our currency," Nguyen Minh Triet, president, said in Singapore last week. "We will take cautious steps on our monetary policy."
Yesterday's move cut the mid-point of the currency's managed float range from 17,034 dong to the dollar to 17,961, while narrowing the daily trading range from 5 per cent to 3 per cent either side. The benchmark interest rate was increased from 7 per cent to 8 per cent.
The Ho Chi Minh Stock Index fell 4.5 per cent. Some analysts, though, said yesterday's moves would have a beneficial effect in the medium term. "I think it is positive, because it clears up some uncertainty," said Kevin Snowball of PXP Vietnam Asset Management.
(Excerpt) Read more at ft.com ...
Gives new meaning to going long on the dong.
The commodity traders in Viet Nam are Long Dong on Silver.
I’m following Anita Hill’s investment newsletter and going long the dong and silver.
Sorry, didn’t see your post. LOL!!
S ok, wicked minds think alike
So the dong is down? I am going to sleep.
short the dong , long dong all wrong
The dong appears to be getting weaker every year.
My wife devalued my dong so I divorced her.
They need to import Viagra and then they can raise the Dong.
Barnie Frank is pleased....
“Inflation puts intense downward pressure on falling Dong”
*snicker*
So the Vietnamese Dong is worse than the Japanese Yen? I thought the Japanese were the least endowed, or at least after watching the South Park “Chimpokomon” episode..
We are exporting our inflation to other countries, if they don’t stop buying dollars they are catch our inflation like the cold.
... but enough about my single days.
I’m sorry, I just cant read this thread with a straight face.
Barney has a Yen for some Dongs, but has been known to make naked calls on Franks and Marks.
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