Vietnam’s stock markets have recovered from the country’s bold move last week to devalue its currency by more than 5 per cent, but investors remain concerned that underlying imbalances in the economy will keep the dong under pressure.
Last Wednesday, the State Bank of Vietnam cut the mid-point of the managed float by 5.44 per cent from 17,034 dong to the dollar to 17,961 and narrowed the daily trading range from 5 per cent to 3 per cent either side. It simultaneously raised the reference refinancing interest rate from 7 per cent to 8 per cent, a move designed not only to support the currency, but also to curb rising inflation and a vicious circle which had led to an acute shortage of dollars.
