Friday, 06 December 2013 18:15
HANOI: Vietnam's central bank said on Friday it would keep the dollar/dong exchange rate stable until the end of this year, a move likely to allay investor concerns about a devaluation of the dong currency.
The State Bank of Vietnam (SBV) saw no reason to intervene because the country's macro economy and money markets, which it said were performing positively.
The dong rose to 21,120/21,160 per dollar on the interbank market on Friday, or 0.24 percent up from Monday. "The exchange rate movements recently have been mainly driven by psychological factors," SBV said in a statement.
"There is no reason for an adjustment of the exchange rate and the SBV will not change the rates from now until end of 2013." The central bank weakened the dong by 1 percent against the dollar in June in what it said was to accurately reflect supply/demand on foreign currencies.
Friday's announcement is likely to be welcomed by investors, many of whom had expected a devaluation at the end of this year, said Nguyen Phong, a macro economy specialist at Viet Capital Securities.
"A stable foreign exchange rate would allow foreign investors to extend their buying in the share market," he said.
The rise in foreign reserves and decrease in the ratio of dollarisation, a longstanding problem for Vietnam's policymakers, have eased pressure on the SBV to devalue the dong.
SBV was holding $25 billion in foreign reserves as at September 2013 and the country's dollarisation had fallen to 12 percent at the end of August this year, from 15.8 percent at the end of 2011, state media reported.Copyright Reuters, 2013