Dong Gains as Standard & Poor's Says No Currency Crisis

Thursday, June 19, 2008
Viet Nam's dong gained as Standard & Poor's said ``extensive'' capital controls and the management of its currency will prevent overseas investors from fleeing the nation.

``Viet Nam is not in a currency crisis,'' Ping Chew, the Singapore-based head of Asian sovereign and corporate ratings at S&P in an interview on June 17. ``There's definitely a bit of hot money that went in. But is it going to leave en masse like that which decimated Asia in 1997? I don't think so.''

The currency gained 0.01% to 16,618 per dollar as of 10:15 a.m. in Hanoi, according to data compiled by Bloomberg. A stronger currency cheapens imports and makes exports more expensive.

Viet Nam's central bank has increased borrowing costs three times this year to 14%, the highest in Asia, as the Southeast Asian nation seeks to tame accelerating inflation. Consumer prices surged 25.2% in May, the fastest since 1992.

The State Bank of Viet Nam set today's reference rate at 16,454 a dollar, compared with the rate of 16,457 yesterday, according to its Web site. The currency is allowed to trade up to 1% on either side of it. (Bloomberg)