Wider trading band lets dong fall faster

Source: Agencies | March 25, 2009, Wednesday |

Print Edition

VIETNAM has widened its daily exchange-rate trading band to plus or minus 5 percent from 3 percent against the United States dollar, effectively allowing the country's currency to depreciate more quickly and helping boost exports, the central bank and officials said yesterday.

The move by the governor of the State Bank of Vietnam, which took effect yesterday, was aimed at "enhancing the flexibility of the economy," it said on its Website. The decision "will help banks and companies be proactive in preparations of their production plans for 2009," the central bank said.

The official exchange rate is 16,980 dong to the US dollar, and the dong has weakened about 2 percent since the start of the year.

Economist Pham Chi Lan said the widening of the daily exchange-rate trading band will help boost the country's exports, which are affected by the global economic recession.

"It certainly helps boost exports and thus would help ease pressure on laying off workers in export industries such as textile, garment, furniture and seafood," she said.

Vietnam exported goods and services were worth US$13.5 billion so far in the first quarter, posting an increase of 2.4 percent from the same period of 2008.

But this figure is very much significantly lower than the 29.5 percent export growth achieved for the whole of last year, according to the Vietnam's General Statistics Office.

Economy

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Wider trading band lets dong fall faster

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