Dong depreciation talked down

November 04, 2010 | 15:10

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Vietnam will not take any moves to depreciate the Vietnamese dong against US dollar until Tet or February next year.

Photo : vir

On November 4, the government said any depreciation would lead further inflation pressure which touched 7.58 per cent as of the end of October, this year.

“Through us, the government wants to say to the public that there will be no move on adjusting the forex rate between Vietnamese dong and US dollar until Tet next year in order to curb and attain the targeted inflation rate at around 8 per cent for 2010,” said Le Duc Thuy, chairman of the Committee for National Fiscal Surveillance.

It is estimated Vietnam’s annual export growth this year will reach 23 per cent, or 5 per cent higher than the planned 18 per cent set rate for this year. Import growth rate for this year is expected 17 per cent. Therefore, balance payment deficit volume is estimated to post around $4 billion, equal to half of that in 2009.

Thuy said the government would take strong activities on supplying US dollar to the market satisfying demand for necessary imports such as petroleum, fertiliser and material inputs for production. The central bank reportedly pumped $200 million to local credit institutions in October instead of being net buyer September purchasing $300 million from those institutions.

The forex rate between Vietnamese dong and US dollar has kept rising during the last two weeks. The rate on the black market reached VND21,000 per one US dollar on November 3 in Ho Chi Minh City, creating a gap between official and black market to 1,500 points.

“The foreign currency reserve which is equal to six or seven weeks of imports is expected to be enough to intervene the market in order keep the forex rate stable,” said Thuy.

By Van Giang

vir.com.vn

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