The VN Dong fell nearly 1% this week, including ~0.3% yesterday, and ~0.3% over last weekend. Investors are probably comfortable if depreciation stays below 2% YTD. Meanwhile, the official reference rate is up 0.9% YTD, so Vietnam’s unofficial FX rate is still within the official band of +/- 3%. Depreciation is being driven by: 1) DXY index, 2) risk aversion, as evidenced by gold prices, 3) USD flows.
VinaCapital’s Chief Economist Michael Kokalari writes about the impact a rising US Dollar will have on Vietnam, and how the country is in a better position compared to some other emerging markets.
After gaining 22% in the first quarter of 2018 and peaking at 1,204 points in early April, the VN Index has seen a sharp decline over the past six weeks, erasing all of the gains it made year-to-date and closing below 1,000. VinaCapital provides its views on what’s behind this correction and why it continues to have confidence in the market’s long term prospects.
The value of the Vietnam Dong has remained remarkably stable this year, despite the depreciation of several emerging market currencies that prompted significant capital outflows from those countries. Furthermore, this week Fitch upgraded Vietnam’s credit rating to BB, the first time since early 2014, citing the country’s improved ability to absorb external shocks. Our Chief Economist explains why Vietnam has been resilient while other countries have not.
After several successful share sales and IPOs, Vietnam’s equitization/privatization program has picked up steam in recent months. What’s behind this activity, and where are things headed?