Jun 16, 2011 The dong’s recent stability will likely be temporary and it will resume weakening by year-end, Credit Suisse Group AG said today as it cut its growth forecast for Vietnam.
The Southeast Asian country’s economy will expand 5.8 percent this year, compared with an earlier forecast of 6.2 percent, a Credit Suisse research note released today said. The dong will weaken 1.4 percent to 20,900 per dollar by year-end and reach 21,400 by the end of 2012, according to the prediction, which said the currency’s recent steadiness was driven more by administrative measures than monetary tightening.
“There are many reasons to believe that this is only a temporary phenomenon before another episode of instability,” wrote Santitarn
Sathirathai, a Singapore-based economist at Credit Suisse. “A combination of higher inflation, slower growth, and signs of financial distress are likely to spark concerns among investors in the coming months.”