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Vietnam Central Bank Devalues Dong To Buttress Exports

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http://www.bloomberg.com/news/2015-01-06/vietnam-weakens-dong-reference-rate-to-boost-nation-s-exports.html

The State Bank of Vietnam devalued the dong for the second time in seven months as regional currencies declined, seeking to support exports that have sustained the country’s economic growth.

The central bank weakened its reference rate 1 percent to 21,458 dong a dollar, effective today, it said on its website late yesterday. The dong is allowed to trade as much as 1 percent either side of the fixing. The currency fell 0.3 percent to 21,470 as of 11:43 a.m. in Hanoi, according to data compiled by Bloomberg, heading for its biggest drop since the currency was last devalued on June 19.

The decision “is in line with movements in the local and international currency markets,” the central bank said. The currency was also devalued by 1 percent in June. Governor Nguyen Van Binh said last month that the regulator wouldn’t weaken the dong more than 2 percent in 2015.

Asian currencies have weakened against the dollar over the past six months as investors bet the U.S. Federal Reserve will begin to raise interest rates this year. Vietnam’s move helps keep the country’s goods competitive against rivals, after shipments by manufacturers such as South Korea’s Samsung Electronics Co. boosted exports by 13.6 percent last year.

Everyone is seeking that export led growth.... Everyone needs a lower currency to be competitive.

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Well I came on here tonight expecting to see a thread on how GBP has tanked recently against the USD, instead I find a thread on VND! This is weird as I am off to Vietnam in 6 weeks and have noticed how the Pound has plummeted against the Dong. A year high of 36500 down to todays low of 32400.

Heres my question, if the Dong has been devalued, then why is it continuing to strengthen against Sterling? I thought that the Dong, as well as other regional currencies, such as Laos Kip, Thai Bhat etc were pegged to the USD? So ergo if USD continues to rise against Sterling, then the Vietnam Central Banks devaluation means nothing to my Dong holiday fund, is this a fair guess?

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Dong now down to 32270 to GBP, a fresh 1 year low. If this is devaluation it aint working for me! I would dong myself up now to prevent future losses, but unfortunately its non convertible outside Vietnam.

To put it bluntly I cannot go short or long on Dong!

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