Vietnam is closely monitoring the dollar's slide so it can take appropriate steps to stabilise markets and the dong, President Nguyen Minh Triet said Sunday, adding that more coordination among countries is needed to support international currency markets. Triet, who is visiting Singapore for an Asia-Pacific summit, said positive signs of recovery of the Vietnamese and global economies made the government confident in achieving 5.2 percent growth this year, which was in line with its target. “Vietnam is very closely tracking the fluctuations and recent fall in the value of the U.S. dollar to have appropriate measures aimed at stabilising financial markets (and the) domestic currency, and to ensure foreign exchange needs for economic transactions with other countries” are met, he said. “We want countries to strengthen coordination to maintain stability of international currency markets to support the recovery of world economy and of individual countries,” Triet said in emailed responses to questions from Reuters. The dollar has declined some 16 percent against a basket of six major currencies from the highs set in March and is down more than 37 percent from a peak in 2001. Regardless, the greenback has remained the reserve currency of choice for business and households alike in Vietnam's highly dollarized economy, and liquidity has been tight this year due to expectations that the local currency would weaken. The dong has shed about 8 percent against the dollar on the unofficial market since this time last year. Last Wednesday, it plummeted to an all-time low of 19,800 per dollar when a gold buying frenzy pushed up demand for dollars and suppressed the dong, before rebounding later in the day when the government ended a ban on gold imports. The ban on gold imports, imposed in May 2008, had led to a gap between domestic and global prices. The Vietnamese central bank has rationed the supply of dollars into the banking system and inched the official exchange rate downward in a bid to ease devaluation pressures, but it has been unwilling to launch a full-scale defence of the currency. Foreign exchange reserves declined from $23 billion at the end of 2008 to about $16.5 billion by August 2009, mostly due to intervention, according to World Bank data. Given the US economy's recovery and its important role globally, the dollar would remain important globally for years to come because “it is not easy to change habits and psychology”, Triet said. Vietnam's economy had shown positive signs of late, Triet said. In the first nine months of this year gross domestic product grew 4.56 percent after clocking 5.76 percent in the third quarter.
