Vietnam FX moves bold, send positive signal

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Báo Tuổi Trẻ English - 65 month(s) ago 1 readings

Measures announced by Vietnam on Wednesday to address its currency's weakness, including a devaluation, were bold and send a positive signal about the government's determination to tackle macroeconomic risks, the International Monetary Fund said.

"The moves that they've made today send a positive signal of the government's intent," said Benedict Bingham, the IMF's senior resident representative.

"I think the decisions that they have announced today signal that they have decided to tackle the emerging macroeconomic risks that they were facing, and I think that's positive," he said.

Bingham said the moves were "bolder than many thought were possible a couple of weeks or so back".

"We will now have to see how the markets are going to react, because the key challenge for the government is to restore confidence in the exchange rate band."

Vietnam's central bank devalued the currency by more than 5 percent, raised key interest rates by 1 percentage point, and signalled that the prime minister would request some exporters to sell foreign exchange to alleviate dollar hoarding.

It narrowed the trading band of the dong to +/-3 percent either side of a daily midpoint from +/-5 percent.

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