Vietnam trade deficit causes pressure on current account: HSBC

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An undated photo of a cargo ship docking at a Vietnamese seaport. Photo: Diep Duc Minh An undated photo of a cargo ship docking at a Vietnamese seaport. Photo: Diep Duc Minh

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British bank HSBC has urged Vietnam to take measures to curb its trade deficit, warning it will put pressure on its balance of payments and current account.
An HSBC report on the country’s economic outlook previously forecast the current account balance to slip into a deficit equivalent to 1.6 percent of GDP this year, after "comfortably" running surpluses for five years.
The trade balance slipped into the red last year with a deficit of US$3.54 billion after surpluses for three consecutive years.
The balance of payments is also facing pressure due to the declining foreign exchange reserves, HSBC analyst Izumi Devalier said at a conference in Hanoi Thursday.
The reserves shrank by $6.7 billion in the third quarter last year to $30.3 billion at the end of September, HSBC quoted data from the International Monetary Fund as saying.
Devalier also cited the HSBC report as projecting the dong-US dollar exchange rate to be at VND23,000 at the end of this year, a fall of more than 5 percent for the Vietnamese currency from the latest rate the central bank set Friday.
She advised Vietnam to closely watch the moves of the Chinese central bank, warning that another sudden plunge in the Chinese yuan could upset its applecart.

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