Vietnam not devalue dong, says PM

VietNamNet Bridge - Vietnam has no plans to devalue the dong within the current context of current account and the current general economic situation, affirmed Prime Minister Nguyen Tan Dung. The Prime Minister made the statement at a meeting with JP Morgan chief economist David Fernandez on June 5 to discuss issues of great concerns by foreign investors such as investment capital control, foreign exchange policy, current account, foreign currency reserve and deposits by local people. The value of the dong will be decided by market supply and demand and though the market is under pressure, Vietnam still had a surplus of $1 billion in its current account during the first five months of this year, Mr Dung stressed. Currently, the daily trading band announced by the State Bank of Vietnam is plus or minus 1%, lower than the expected band of ± 2% for 2008. Given the current forex surplus, the Prime Minister believed that the US dollar/dong trading band should be adjusted in a flexible manner in both directions with appropriate steps. In the short term, the band could be changed to come to close to the ± 2% as projected. The government would have clearer message in order to help stabilise the stability of the dong. The Prime Minister also rejected forecasts in foreign markets that the dong will be devavlued by 20-40%, saying that these predictions were groundless. The State Bank of Vietnam has yet to make any direct intervention in the unofficial foreign currency market, said Mr Dung, emphasising that the he would instruct the bank to strengthen its measures to intervene in the market. With it current foreign currency reserve, Vietnam is totally capable of ensuring normal transferring of foreign currency by foreign investors, Mr Dung said. Vietnam would soon make public its foreign exchange reserves in dollars, the prime minister stressed. These information had before only been provided to international organisations such as the World Bank. In order to win the public's trust, the State Bank of Vietnam will publish the national foreign currency reserves on a regular and detailed basis. The prime minister expressed his belief that the surplus in the balance of payments will grow bigger in the medium-term.