Illustrative image (​Source:VNA)

Hanoi (VNA) - Vietnamese shares on December 9 pulled back on both local bourses after previous day’s rally amid investor concern that an overvalued dong will undermine the country's export competitiveness.

The benchmark VN Index on the HCM Stock Exchange lost 1.6 percent to close at 565.2 points and the HNX Index on the Hanoi Stock Exchange was down 0.7 percent to end at 79.6 points.

Large-cap companies such as Vinamilk, Vietcombank, the Bank for Investment and Development of Vietnam (BIDV), Masan Group and FPT Corporation led the market decline amid fears that the changes in exchange rate between Vietnamese dong and the US dollar will hurt their profitability.

Firstly, analysts expect the US dollar will strengthen against the dong as the US central bank is set to consider an interest rate hike at its meeting next week.

A stronger dollar may force Vietnam's central bank to devalue the dong in order to keep Vietnamese exports competitive in the international market. The bank currently allows the dong to trade in a range known as a trading band. In recent days, the dong has traded around 22,500 per dollar, near the band's upper limit.

Investors are also eyeing a slump in the Chinese yuan, which hit a four-year low on December 9 due to a slowdown in the world's second largest economy with lower exports in November and a slower economic growth rate during the July-September period.

The unpredictable future of the Chinese yuan and the US dollar will make it harder for Vietnam to consider its monetary policy next year to ensure the competitiveness of Vietnamese exports against Chinese products, Bao Viet Securities Corporation (BVSC) wrote in its report.

"The current slowdown in China's economy made the yuan hit a four-year low, however, it may get stronger in comparison with the US dollar in middle term as it has been added into the basket of reserve currencies by the International Monetary Fund (IMF)," Bao Viet said.

At the end of December 9, Vietcombank (VCB) lost 3.9 percent, Vinamilk (VNM) fell 1.6 percent, BIDV (BID) dropped 1.9 percent, Masan Group (MSN) was down 0.7 percent and FPT Corporation (FPT) declined by 1.6 percent.

Both local bourses traded more than 146 million shares worth 2.27 trillion VND (101 million USD), a decrease of nearly 10 percent from the trading value on December 8.-VNA