Devaluation Approaching: Can Hanoi Make It Alone?

We believe a devaluation of the Vietnamese dong is approaching as evidenced by the widening trade deficit and decreasing public confidence in the unit. While we are expecting a devaluation of the dong by around 6% from VND17,860/US$ on November 11 to VND19,000/US$ by end-2009, this will be no panacea, and will need to be coupled with fiscal and monetary tightening to stabilise the balance of payments.

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