This week was a historically bad one for the Vietnamese one as it dropped to its lowest level yet. Banks are working to adjust their exchange rates but finance specialists have expressed concern over the setback.
According to the VnExpress, the State Bank of Vietnam set a reference rate of VND23,004 on Tuesday, sending banks and exchange rate trackers in a ruckus. On Wednesday, the bank lowered the reference to VND23,013.
Industry experts said Vietnam's currency surrendered VND179 to the U.S. dollar since the start of 2019. The figures are equivalent to a 0.78 percent loss but currency analysts said it may be too early to make conclusions about the Vietnamese dong's stability throughout the year.
Economist Nguyen Tri Hieu pointed out that there are several factors affecting the drop in Vietnam's currency. Aside from interest rates imposed by the U.S. Federal Reserve, fluctuations in the global financial market also took a toll on the dong.
Despite the Vietnamese dong's historic low against the U.S. dollar, many experts predicted that Vietnam's currency will be more stable in the near future. Analysts said stability will be supported largely by increasing foreign direct investments (FDI).
Vietnam Plus reported that currency experts are optimistic about the Vietnamese dong's supposed performance in the near future. They said assistance from the central bank could help strengthen the dong against the American currency.
A recent report by Fitch Group's Fitch Solutions Macro Research indicated that Vietnam's FDI developments within the country's manufacturing sector will play a major role in preventing the dong from wavering further.
The report added that strong economic outlooks on Vietnam could attract further FDI inflows in the real estate industry. Researchers said many foreign developers may find interest in the country's solid economy that has not experienced a recession for three decades.
The Vietnamese dong has weakened against the U.S. dollar but the economy is still growing. The World Bank forecasted on Wednesday that Vietnam's economy will grow by 6.6 percent this year. The bank also said poverty rates are expected to decline.
Last year, Vietnam recorded a gross domestic product (GDP) growth of 7.08 percent, a significant jump from the target of 6.5-6.7 percent.
While most economists are looking forward to Vietnam's expansion this year, others have warned of potential downsides to the forecasts as early signs of a slowdown showed during the first quarter of 2019.
Economic experts said Vietnam's Q1 2019 slowdown in economic development was largely impacted by global trade disputes and weakening world demand.
