Awwal 08, 1432, Feb 11, 2011, SPA -- Vietnam on Friday devalued its currency by a record 9.3 per cent against the dollar in a bid to promote growth and narrow its trade deficit, according to dpa. The State Bank of Vietnam set the reference rate at 20,693 dong to the dollar, compared with 18,932 on Thursday, the biggest devaluation since 1993. It also narrowed the trading band of the dong against the dollar from 3 per cent to 1 per cent effective Friday. It was the fourth devaluation since 2009, weakening the dong by 13.6 per cent in total. The government, which controls the exchange rate through its State Bank, said the move also was aimed at increasing liquidity in the domestic foreign exchange market and promoting exports. Vietnam suffered a trade deficit of 12.4 billion dollars last year, which represented 17.3 per cent of its total export revenues. Black-market traders were offering 21,580 dong to the dollar Friday, up 230 dong from Thursday. Several have temporarily stopped transactions to wait for the market's response to the devaluation. Another purpose of the devaluation at this point was to narrow the gap between the official exchange rate and the black market rates, economist Le Dang Doanh said. Exporters were frustrated over the coexisting exchange rates because they are not allowed to sell dollars in unofficial markets but to commercial banks where exchange rates are much lower.
