The Vietnamese central bank has said the country will not devalue the dong currency, after it slumped to a record low today.
The heavily-managed, sparsely traded dong dipped 0.2 per cent versus the dollar today to 21,388. That is the weakest on record versus the greenback, for a currency that has generally traded around the 21,000 mark since the last devaluation in 2011.
In an emailed statement to Bloomberg, the Vietnam central bank said it would not devalue the dong again despite the recent exchange rate softening, pointing to a balance of payments surplus of about $11bn between January and October.
The central bank was reportedly responding to speculation of a devaluation, but central banks are generally wary of even acknowledging such talk as a public denial can fan the rumours.
Moreover, the International Monetary Fund pointed out in its most recent report on the country that Vietnam's budget position has deteriorated, government debts are rising and the economy is only expected to grow 5.5 per cent this year – undershooting the government's 5.8 per cent target.
Despite the central bank's protestation perhaps this is a good time to be short dong anyway...?
original source: http://www.ft.com/intl/fastft/238332/vietnam-seeks-dispel-dong-devaluation-talk