State Bank of Vietnam Devalues Dong By 9.3% Against U.S. Dollar

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Feb. 15 – The State Bank of Vietnam decided to lower the Vietnamese dong by 9.3 percent to VND20,693 to a U.S. dollar. The decision came into effect February 11.

Dr. Tran Hoang Ngan, member of the national advisory council for monetary and financial policies, said the decision will help reduce the psychological need to hold dollars. It will also make transactions in U.S. dollars more transparent.

Though a number of foreign capital funds had brought hard currency into Vietnam, they had not yet converted their investments because they believed favorable foreign exchange rates lay ahead.

The new policy “will further attract indirect investment while foreign investors will become further confident in disbursement,” Ngan explained.

The former governor of the State Bank of Vietnam, Cao Sy Kiem, said the recent adjustment of the dong’s value relative to the dollar would not only promote export growth but also curb trade deficits, particularly with imported goods that could instead be manufactured at home.

Representatives from several Vietnamese banks said the recent adjustment would make it easier for banks to raise deposits in U.S. dollars, which would allow banks to meet the demand for foreign currencies easily. A sizable supply of dollars would also help the SBV strengthen its insulation from financial shocks that may arise from the region.