Vietnam wants dong currency to be convertible
HANOI - Vietnam, with a small but fast-expanding economy, wants the restricted Vietnamese dong to be convertible in the international market, a central bank official said on Thursday.
"We want the dong to become a convertible currency," Deputy Governor of the State Bank of Vietnam Phung Khac Ke told reporters after a signing ceremony of a $35 million financing agreement with the World Bank to help Vietnam fight bird flu.
"The government has assigned the State Bank to work on this project," he said without giving further details or outlining a timetable for currency convertibility.
Vietnam's economy is projected to grow more than 8 percent this year. The country's gross domestic product expanded 8.17 percent last year to around $60 billion.
Asked if the central bank planned a further depreciation of the dong to support exports, Ke said: "Our policy in managing the dong is to aim for a stability and flexibility to support both exports and imports."
Vietnam had a trade deficit of $1.32 billion in the first quarter of this year, against a $60 million surplus after the first three months of 2006.
The World Bank last week forecast that Vietnam's trade deficit would jump 26.5 percent to $7.98 billion this year from 2006.
But it also forecast that the country's foreign currency reserves plus gold would be boosted to $16 billion this year from $12.5 billion last year and $8.6 billion in 2005.
Truong Van Phuoc, director of the central bank's Central Banking Department, said in March the central bank did not have any fixed outlook on the dong's movement against the dollar.
The central bank has allowed the dong to weaken so far this year just 0.07 percent against the dollar.
On Thursday the dong eased to 16,112 to the dollar, from 16,101 at the end of 2006.
Reuters - April 12, 2007.
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