Vietnam: Vietnam's Central Bank devaluates dong
June 28, 2013
On 28 June, the State Bank of Vietnam announced a 1.0% devaluation of the Vietnamese dong (VND) interbank average exchange rate from 20,826 VND per USD to 21,036 VND per USD, in an effort to boost the country's exports and consequently its foreign exchange reserves. The adjustment marks the first devaluation since 2011. With the new exchange rate band of +/-1.0% of the inter-bank average exchange rate, the ceiling exchange rate is 21,246 VND per USD, and the floor rate is 20,826 VND per USD.
In addition, the Central Bank cut the cap on deposit interest rates in U.S. dollars from 0.50% to 0.25% for corporate depositors and from 2.00% to 1.25% for households. Simultaneously, the Bank lowered the maximum rate for dong deposits from 7.50% to 7.00%. With these moves, the Bank seeks to rebalance the current account deficit as well as to buttress consumption, as the government aims to achieve a 5.5% GDP growth this year and 6.0% the next.
FocusEconomics Consensus Forecast panellists expect the dong to trade at 21,272 per USD by the end of this year. For 2014, the panel projects the dong to trade at 21,449 per USD.