Vietnam's central bank said on Tuesday it was ready to pump US dollars into the market to stabilise the dong currency's exchange rate, as it had come under pressure due to fallout from the US-China trade war. Vietnam's dong has weakened 0.9 percent this year and has fallen nearly 2.8 percent from a year earlier, according to Refinitiv Eikon data. The dong was quoted at 23,380/23,410 per dollar on Tuesday.
"The dong has weakened over the recent days because of concerns about the new development in the US-China trade negotiations," Pham Thanh Ha, head of the State Bank of Vietnam's monetary policy department, said. The devaluation of China's yuan since late April has also put pressure on the dollar-dong exchange rate, Ha said in a statement posted on the central bank's website.
The yuan fell to its weakest level since December on Friday, and sources said China's central bank will use monetary policy tools to stop yuan weakening past the key 7-per-dollar level in the near-term. Ha's statement comes days after media reports said that the Trump administration may add Vietnam to the list of countries it monitors for currency manipulation. "The central bank will closely monitor market conditions... and will use monetary policy tools to stabilise the foreign exchange market," Ha said in the statement.
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