AFP, Hanoi :
Vietnam doubled the trading band for the dong on Wednesday, allowing the currency to weaken to try to make exports more competitive as China devalues.
Vietnam’s largest trading partner China twice this week cut the value of the yuan against the dollar, sending shockwaves through financial markets.
The new band allows the dong to trade by up to two percent on either side of the mid-point set daily by the central bank.
The dong weakened by one percent to 22,040 a dollar early Wednesday. The reference rate was unchanged at 21,673.
“As China is Vietnam’s largest trading partner, an adjustment of Chinese currency will have a negative impact on Vietnam’s economy,” the central bank said in a statement.
The move also follows two devaluations of the dong, both by one percent, in January and May this year.
The aim is to “help the dong be more flexible and cope with adverse impacts on international markets, and to ensure the competitiveness of Vietnamese goods”, the bank added.
China cut the yuan’s reference rate on two consecutive days this week-by a record 1.9 percent Tuesday and 1.62 percent on Wednesday-a decision widely seen as an attempt to boost exports amid slowing growth.
China’s central bank described it as a one-off reform to its exchange rate system.
Vietnam is trying to keep its own economy on track to meet a government target of 6.2 percent growth this yea
Vietnam doubled the trading band for the dong on Wednesday, allowing the currency to weaken to try to make exports more competitive as China devalues.
Vietnam’s largest trading partner China twice this week cut the value of the yuan against the dollar, sending shockwaves through financial markets.
The new band allows the dong to trade by up to two percent on either side of the mid-point set daily by the central bank.
The dong weakened by one percent to 22,040 a dollar early Wednesday. The reference rate was unchanged at 21,673.
“As China is Vietnam’s largest trading partner, an adjustment of Chinese currency will have a negative impact on Vietnam’s economy,” the central bank said in a statement.
The move also follows two devaluations of the dong, both by one percent, in January and May this year.
The aim is to “help the dong be more flexible and cope with adverse impacts on international markets, and to ensure the competitiveness of Vietnamese goods”, the bank added.
China cut the yuan’s reference rate on two consecutive days this week-by a record 1.9 percent Tuesday and 1.62 percent on Wednesday-a decision widely seen as an attempt to boost exports amid slowing growth.
China’s central bank described it as a one-off reform to its exchange rate system.
Vietnam is trying to keep its own economy on track to meet a government target of 6.2 percent growth this yea
