Aug. 20 (Bloomberg)—Vietnam’s dong had its worst week since February, dropping to a record low, after the central bank devalued the currency for a second time this year to help reduce the trade deficit.
The dong rose today for the first time since Aug. 18, when the State Bank of Vietnam set the daily reference rate 2 percent lower at 18,932 per dollar. Government data show the trade deficit in the seven months through July almost doubled to $ 7.4 billion from a year earlier, while the International Monetary Fund said on June 9 the nation’s foreign-currency reserves have fallen to the equivalent of seven weeks of imports from coverage of less than two-and-a-half months in December.
The central bank, over the three moves since November, has devalued the dong by 10% against the dollar. But that has done little to turn around the trade balance. The trade deficit widened to $ 980 million in July from $ 742 million in June. In the first seven months of 2010, the gap was $ 7.26 billion, up from $ 3.65 billion in the same period last year, and approaching a $12 billion limit the government is targeting for the full year.