Dong Set To Test Record Low

May 2008 | Market Alert

The dong looks set to drop towards its Q308 record low of VND16,245/US$ in the near term, as concerns about rising inflation and the trade gap mount. The central bank attributes the dong's recent weakening to heavy US dollar demand from the Vietnamese public. Consequently, the one-year non-deliverable forward (NDF) has surged from VND18,500/US$ to VND22,500/US$ in recent days, implying expectations of a virtual collapse of the currency. However, the authorities are still publicly stating their commitment to a stable exchange rate. In this regard, the central bank denied reports in the Wall Street Journal today that the dong's daily

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