The Vietnamese dong today slid by 100 dong against the US dollar to 22,460 dong, the lowest level this year.
The slump was blamed on recent fluctuations in international foreign exchange markets, including China's devaluation of its yuan by 0.45 per cent, which saw it drop to its lowest level in the last five years.
Speculation that the US Federal Reserve could hike interest rates possibly this month was another factor.
But some market observers believed that the dollar's rise could be short-lived since it was caused by banks buying the greenback to balance their foreign currency positions.
A day later the dong gained against the dollar though the average daily interbank exchange rate fixed by the central bank edged upwards.
On Tuesday the dollar fell by 20-25 dong to 22,425-22,430 dong. Vietcombank bought the currency at 22,360 dong and sold it at 22,430 dong, down 20 dong from the previous day.
On the unofficial market in Ho Chi Minh City, the dollar was bough at 22,380 dong and sold at 22,420 dong, down 70 dong from Monday.
The forex rates have still been remarkably stable this year although late last year the State Bank of Vietnam (SBV) begun a new foreign exchange management mechanism to cope with changes in the market, especially the global market.
Under it, the reference rate, or the inter-bank exchange rate, will be managed more flexibly and could changed regularly, even daily. The central bank manages the foreign exchange market through a relatively stable inter-bank rate and daily trading bands.
Some analysts said the stability in the forex rate is not exactly good for domestic firms because the dong has been appreciating even as many countries recently devalued their currencies.
Speculation that the US Federal Reserve could hike interest rates possibly this month was another factor.
But some market observers believed that the dollar's rise could be short-lived since it was caused by banks buying the greenback to balance their foreign currency positions.
A day later the dong gained against the dollar though the average daily interbank exchange rate fixed by the central bank edged upwards.
On the unofficial market in Ho Chi Minh City, the dollar was bough at 22,380 dong and sold at 22,420 dong, down 70 dong from Monday.
The forex rates have still been remarkably stable this year although late last year the State Bank of Vietnam (SBV) begun a new foreign exchange management mechanism to cope with changes in the market, especially the global market.
Under it, the reference rate, or the inter-bank exchange rate, will be managed more flexibly and could changed regularly, even daily. The central bank manages the foreign exchange market through a relatively stable inter-bank rate and daily trading bands.
Some analysts said the stability in the forex rate is not exactly good for domestic firms because the dong has been appreciating even as many countries recently devalued their currencies.
original source: http://www.nationmultimedia.com/business/Dong-slumps-to-lowest-level-against-dollar-in-2016-30287498.html