Vietnam devalues dong to boost growth

[HANOI] Vietnam's central bank said Thursday it would devalue the dong currency for the second time this year in a bid to boost exports and drive the economy forward.

The State Bank of Vietnam (SBV) will devalue the reference rate by one percent to 21,673 Vietnamese dong per dollar to "cope with adverse impacts of international markets", it said in a statement.

The dong was last devalued by one percent in January.

The second devaluation of the dong in five months follows the "evolution of national and international financial markets", the SBV statement said.

The new measure came into force Thursday.

In December SBV governor Nguyen Van Binh said that the regulator will not weaken the dong by more than two percent in 2015.

The dong devaluation will help keep Vietnam's thriving exports - including smartphones and other electronics manufactured by Korean giant Samsung in its Vietnamese factories - competitive with regional rivals.

Rising exports helped Vietnam to achieve its highest GDP growth in three years in 2014 with the economy growing an estimated 5.98 per cent, while inflation slowed to 4.09 per cent, official figures showed.

But the exports boom has yet to spill over into the domestic economy, which remains sluggish in part due to lingering problems in the banking sector and the dominance of inefficient state-owned enterprises.

Vietnam's central bank cut policy interest rates last year to spur lending and help businesses.

The government is targeting growth of 6.2 per cent this year.

AFP