The Vietnamese dong, which has fallen to around its record low, is seeking room for a rebound as factors including stronger economic growth, steady FDI and plans to consolidate the stock market emerge.
The Vietnamese dong has remained at low levels after updating last year's record low, but views are emerging that downward pressure may ease somewhat against the backdrop of the recent recovery in economic growth and increased direct investment. The stronger dollar and swelling import costs continue to be cited as factors behind the dong's weakness, while there is also speculation that inflows of foreign capital will support the currency.
The restructuring of the stock market is expected to provide a new source of support. Under the plan, listed shares on the Hanoi Stock Exchange will be transferred to HoSE from 28 December, consolidating trading on a single market. The move is reportedly intended to make the market structure easier to understand and encourage participation by foreign investors.
At present, rising dollar demand from importing companies and the widening trade deficit are putting selling pressure on the dong, but there are signs of a recovery from the lows recorded in the summer. GDP growth in the July-September quarter was approximately 9.95% year on year, a high level, while concerns about inflation are also intensifying.
The authorities have indicated a policy of curbing excessive dong weakness while maintaining currency stability. The focus will be on how far the inflow of foreign capital triggered by the consolidation of the stock market progresses.