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 ...
grim dollar/dong ping
Wow...everything is getting devalued...
It was evident that hyperinflation of the dong was driven by an eight billion dollar stimulus. But measures to bring the raging dong under control were immediately blocked in committee by Chairman Bah Nee Fwank.
Devalued versus what?
Beat me to it! Arrgh!
No more yanky my wanky! The Donger needs food!
Puns aplenty ping!
>They need to import Viagra and then they can raise the Dong.
You! I was drinking milk and splattered it!
Going long?
Give them an inch and they’ll call it a foot.
Everyone wants a strong dong.
They should have checked the urban dictionary before naming their currency.
Long Dong Silver upset!
Ping dong to pile dung
I though that the Dong was rising.
Vietnam needs to keep their hands off the Dong.
Or at least bring in a Ding. LOL
What, this isn’t pingworthy? ;’)
Counterfeits, obviously home made and... likely delicious.
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.:'D :'D :'D :'D :'D :'D :'D :'D
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