StanChart forecasts dong to fall further against US dollar

01-Dec-2016 Intellasia | The Saigon Times | 6:00 AM Print This Post

Standard Chartered in a recent report forecast a further depreciation of the dong on the broader US dollar’s strength amid sharp rises of the greenback against other currencies, including the Chinese yuan.

The bank revised up its exchange rate forecast to VND22,900 to the dollar at the end of this year from VND22,400 previously. The exchange rate is expected to stand at VND23,000 in the first quarter of 2017 and increase steadily to VND23,300 by the end of 2017.

According to the report, among the broad-based move higher in dollar versus Asian currencies, the pace of the dong’s depreciation against the dollar has picked up recently. Having held within a relatively narrow range of over 100 basis points in January-August this year, the daily dollar-dong exchange rate fixings by the State Bank of Vietnam (SBV) then began to creep higher.

The dollar-dong spot, on the other hand, held steady below VND22,500 per dollar for most of the year, until the past fortnight when it surged above that level and is now trading close to the 3 percent limit of the trading band.

While Vietnam’s economy has been strong, the dollar-dong move echoes similar falls in other Asian currencies. This shows the dong is not immune to broader dollar strength following Trump’s election victory and the depreciation of China’s yuan. This is reminiscent of previous instances where a significant pick-up in yuan volatility has affected the dong.

The dollar soared to the ceiling set by the SBV last Thursday and then dropped gradually to VND22,660-22,670 for buying and VND22,750-22,780 for selling. Vietcombank’s dollar buying and selling prices stood at VND22,660 and VND22,760 on November 28, down VND20 from the close last Friday.

Meanwhile, the reference exchange rate between the two currencies was VND22,132 per dollar, a 1.1 percent pickup from VND21,890 early this year. With the trading band of 3 percent on either side, the dollar could be traded at between VND21,468 and VND22,796 at commercial banks.

The dollar has weakened on global markets. According to Reuters news agency, the US dollar index, which tracks the dollar against a basket of six major rivals, dipped to 100.66 on November 27, having soared to a 13-and-a-half year high of 102.05 on November 24.

http://english.thesaigontimes.vn/51096/StanChart-forecasts-Vietnam-dong-to-fall-further-against-US-dollar.html

 


Category: Finance, Vietnam

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