Now, I know it was up for discussion as to whether or not the DONG was going to RV or not, but this is interesting to say the least:
VietFinanceNews.com – The Vietnamese dong rose in unofficial trade on Monday after the government urged the State Bank of Vietnam to take strong action to control the currency and the central bank granted additional gold importing quotas.
The dong rose to 21,270/21,350 a dollar at a major gold shop in Hanoi from 21,400/21,470 a week earlier. The unofficial ask rate dipped to a record 21,600 per dollar on December 1, before clawing back, state media reported.
Traders attributed the dong strengthening to the central bank’s recent granting of gold import quotas for banks and gold companies, which discouraged speculators from accumulating dollars to smuggle the precious metal into Vietnam.
“Those who had speculated in dollars had to sell because they can’t hold them for a long time, so prices fell,” a currency trader at a Vietnamese bank said.
The State Bank of Vietnam granted additional quotas for domestic companies to import gold between November 25 and the year’s end in a bid to cool domestic gold market prices, after giving eight banks and gold bar producers quotas in early November.
Currency speculation, which helped push the dong down in recent weeks, has eased over the past few days, the trader added.
Another trader with a different partly-private Vietnamese bank said the government’s recent forecasts and messages had also injected optimism into the foreign exchange market.
“I think the government’s forecasts have reduced speculators’ expectations of changes in the rates,” he said.
Vietnam may receive $7.3 billion of overseas remittances this year, an increase of $1.9 billion from 2009, central bank governor Nguyen Van Giau said.
He said foreign indirect investment this year will rise to $712 million from $500-600 million last year, state media reported.
The prime minister has asked the central bank to take “strong” steps to stabilise the foreign exchange and gold markets [ID:nSGE6B002M], while the Ministry of Industry and Trade also revised its trade deficit estimate for this year down to $12 billion from $13.5 billion.
Trade and budget deficits, high inflation, speculation and a general lack of confidence in the dong have resulted in a steady slide over the past three years, economists say.
Dollar transactions have been stable in the official market in the past week, with the dong rate quoted on Monday at the weak limit of the trading band.
This was still more than 8 percent weaker than the official trading band permits.
“Trading has risen very little from the previous weeks despite the fact that it is the end of the year now,” the trader said, adding the quiet market resulted from businesses’ reluctance to import goods or to expand operation at a time of inflation and the fall of the local currency. (Reuters)