Vietnam’s currency has fallen to a new record low versus the dollar after the central banks set the fixing at a lower level.
The dong fell 0.1% on Monday to 25,485 dollars, surpassing its previous low in May.
The dollar has risen after Donald Trump won the election, and emerging-market currencies are under pressure. Trade-dependent nations have been particularly vulnerable due to concerns over US tariffs. The dollar is strengthening due to a hawkish Federal Reserve. This month, the South Korean won fell to its lowest level since 2009.
The dong fell on the back of a rising demand for US dollars ahead of Trump’s official inauguration next month, said Tran Tuan Minh. He is the chief executive officer of TVI in Hanoi, an equity research and investment company. According to Minh, the local currency may weaken even more as companies will need to spend more dollars to pay for their contracts at year’s end.
Last month, the State Bank of Vietnam reaffirmed its willingness to sell US dollars to maintain the stability of the dong.
Bloomberg data show that the central bank has lowered its daily currency reference rate to a new record low of 24,327 Dong per Dollar today. The dong can trade up to 5% on either side of its reference rate.
Minh continued, “We expect that the US dollar will continue to rise for some time and this would prompt the central banks to intervene by selling more dollars to calm the markets.”
Voice of Vietnam, the state radio, reported that on its website without citing any sources, the dong had fallen to 25,850 per dollar on the “black market” on Monday morning.
