Vietnam Asset Management’s monthly Vietnam market outlook update

Despite a long eight-day Tet (Lunar New Year) holiday in Vietnam, February was an eventful month with a series of measures by the government and central bank (SBV) in an increasing effort to stabilise the volatile economy. The most noteworthy but well expected event was the 9.3 per cent devaluation of the Dong on 11 February with trading band simultaneously being lowered to plus one per cent from plus three per cent. The largest single devaluation over years helped bring the official and unofficial rates, which had been diverging for several months, to come closer improving liquidity in the FX market. However, the desired effect seemed not very stable when concerns on high inflation and shrinking foreign reserves continued to put downward pressures on the Dong sentiment.