Think the latest yuan rout is over? Tell that to Vietnam.The slide in China’s currency paused this week after jawboning by the central bank, which told commercial lenders it has the tools to stabilize the market and urged them to avoid “herd behavior,” Bloomberg News reported Tuesday. But the ripples of the yuan’s 4.7 percent drop this year may be just starting to spread to the country’s neighbors.The Vietnamese dong has been moving steadily closer to the edge of its 3 percent daily trading band against the dollar over the past two weeks, as traders bet on faster depreciation.State Bank of Vietnam guided the official rate 1.1 percent lower this year, causing a 2.7 percent fall in the market rate. Like the yuan, the dong is loosely pegged to the dollar.Currency traders are speculating on further declines, having seen how Vietnam has reacted in the past when the yuan has slumped. On Aug. 12, 2015, one day after China jolted global markets with a sudden yuan devaluation, Vietnam widened the dong’s trading band. The currency ended the year with 3 percent depreciation in the official exchange rate, and a 5.1 percent drop in the market rate.The retreat in the dong’s market rate this year is little… Read full this story
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