Vietnam in the midst of currency wars

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The latest official data to testify that the Central Bank of Vietnam continues to weaken its national currency, is being increasingly involved in inter-bank currency wars.
On the 13th of May 2015, the Central Bank of Vietnam passed the resolution for a reduction of an average trading band of 1%.

Almost parallel to the publication of this resolution, the rate of the dong (the national currency of Vietnam) has fallen to its lowest value in comparisson to the dollar, having set up a historical record. It should be noted that a Vietnamese regulator establishes an average value of the USD/dong currency pair each day. Therefore a fluctuation of quotation occurs across a reletively narrow range from the rate established by the Central Bank of Vietnam.

It is hard to state that the resolution made by the monetary authorities of Vietnam is a shock for the market, in light of recent financial events, such a resolution seems only logical.

The deficiency of Vietnam’s trade balance, recorded from Q1 2015 has equalled $3 billion, which is $5 billion higher than it was during the same period last year. Thus, the weakening of Vietnam’s national currency is a result of the restriction of imports and the stimulation of exports. The Central Bank of Vietnam carries out the monetary interventions directed on the weakening of a dong rate for the second time in 2015.