VND slumps to lowest level against dollar in 2016
The slump was blamed on recent fluctuations in international foreign exchange markets, including China’s devaluation of its yuan by 0.45 per cent, which saw it drop to its lowest level in the last five years.
Speculation that the US Federal Reserve could hike interest rates possibly this month was another factor.
But some market observers believed that the dollar’s rise could be short-lived since it was caused by banks buying the greenback to balance their foreign currency positions.
A day later the đồng gained against the dollar though the average daily interbank exchange rate fixed by the central bank edged upwards.
On the unofficial market in HCM City, the dollar was bough at VNĐ22,380 and sold at VNĐ22,420, down VNĐ70 from Monday 06/06/2016.
The forex rates have still been remarkably stable this year although late last year the State Bank of Việt Nam (SBV) begun a new foreign exchange management mechanism to cope with changes in the market, especially the global market.
Under it, the reference rate, or the inter-bank exchange rate, will be managed more flexibly and could changed regularly, even daily. The central bank manages the foreign exchange market through a relatively stable inter-bank rate and daily trading bands.
Some analysts said the stability in the forex rate is not exactly good for domestic firms because the đồng has been appreciating even as many countries recently devalued their currencies.
This has put great pressure on Vietnamese exporters in terms of prices in overseas markets.
The depreciated yuan has brought China’s exports a big advantage by making Chinese products very cheap.