ANZ sees no pressure for Vietnam to weaken dong

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The Australia and New Zealand Banking Group expects Vietnam not to come under pressure to devalue the dong against the dollar due to large foreign reserves.

Reserves have reached US$32 billion, ANZ said October 28, adding that this was its unofficial estimate based on the Vietnamese government's earlier statement, which said the reserves had increased to cover 12 weeks of imports from half of that in 2010.

News website VnExpress quoted Glenn Maguire, ANZ's chief economist for the Asia Pacific region, as saying the country was unlikely to weaken the dong further in the remaining months of the year.

The State Bank of Vietnam weakened the dong by 1 percent in June, the first time since December 2011, and planned a devaluation of no more than 3 percent this year.

But ANZ forecast that dong's slight downward trend would continue and the currency will drop to a level of 21,500 in mid-2004.

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Commercial banks on October 30 quoted dong at around 21,120.

Sources of foreign currency have shown positive signs. Foreign investment for the first ten months exceeded $19 billion, a year-on-year increase of 66 percent.

In addition to that, remittances are rising with the World Bank early this month estimated that Vietnam would receive a record of $11 billion this year compared to $10 billion in 2012.

ANZ expected the country to post a slight trade deficit of $0.5 billion this year, compared to a deficit of over $15 billion three years ago.

Nguyen Hoang Minh, deputy director of central bank's Ho Chi Minh city branch, said the country had restricted dollar borrowing to exporters who earn in dollars and importers of necessity goods.

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