Vietnam’s central bank will weaken the dong’s reference rate to the dollar for the first time since 2011 amid efforts by the government to boost exports and spur the economy.
The State Bank of Vietnam will adjust the rate to 21,036 dong per dollar from 20,828, or a change of 1 percent, effective tomorrow, it said in a statement on its website today. The regulator aims “to improve balance of payment and increase foreign exchange reserves.”
The government’s target of 5.5 percent growth this year, if met, would represent the first time economic expansion slipped below 6 percent for three straight years since 1988, according to data from the International Monetary Fund. Vietnam’s economy expanded 5 percent last year, the slowest since 1999.
The dong is allowed to trade by as much as 1 percent daily on either side of the reference rate, which has remained unchanged since Dec. 26, 2011, according to the central bank. The currency traded at 21,018 per dollar as of today’s close compared with 21,036 yesterday, according to prices from banks compiled by Bloomberg.
The adjustment is “to more accurately reflect the supply and demand of foreign currency in the market” and to “create stability” for the foreign-exchange market, the central bank said in the statement. It said it will use all necessary measures to ensure the stability of the exchange rate.
Vietnam’s currency has weakened 0.4 percent against the greenback so far this quarter. The benchmark VN Index for stocks has gained more than 16 percent this year.