Vietnam’s Central Bank Devalues Dong

The Vietnamese dong dropped today as Vietnam’s central bank devalued the currency for the third time this year. Nation’s policy makers weakened the currency in hopes to counter the fallout from Chinese economic slowdown and potential currency wars.

The rapidly falling yuan can increase the already substantial trade deficit between Vietnam and China, and that prompted the State Bank of Vietnam to set the reference rate for the dong 1 percent lower and widen the range in which the currency is allowed to trade. The devaluation of the currency was also made in preparation for the expected interest rate hike from the US Federal Reserve. Experts say that additional interventions from the SBV are probable, meaning that dong, which has already sank 2.4 percent this month, may fall even lower.

USD/VND jumped 1.27 percent from 22,090 to 22,371 as of 14:43 GMT today.

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