Economists called the State Bank of Vietnam ’s decision to devalue the Vietnamese dong by 9.3 percent to 20,693 VND for a US dollar at the inter-Bank transactions as right and necessary to make the rate closer to the market value.

The decision, which came into force from February 11, also narrows the transaction difference from plus and minus 3 percent to plus and minus 1 percent.

Dr. Tran Hoang Ngan, member of the national advisory council for monetary and financial policies, said the policy will help reduce the psychological need for hoarding of the greenback and virtual demand for the US dollar among the population.

The policy will also make transactions in USD more transparent, said the senior economist.

By late 2010, a number of foreign capital funds had transferred hard currencies into Vietnam but have not yet disbursed their investment, as they were awaiting good forex rates.

Now, the new policy “will further attract indirect investment while foreign investors will become further confident in disbursement,” Ngan explained.

For his part, the former SBV governor, Cao Sy Kiem, said the recent adjustment of forex rates would not only help increase the competitive edge of exports but also curb trade deficits, especially imports that can be produced at home.

As a result, the supply of hard currencies may constantly meet demand, he added.

His view was shared by Nguyen Ngoc Quynh, deputy director of the deposit department under the Bank of Investment and Development of Vietnam (BIDV).

Representatives from several banks said the recent adjustment would make it easier for banks to raise deposits in US dollars, thus meeting demand for the greenback by individuals and businesses. A good supply will also help the SBV strengthen its USD reserves, they argued.

The SBV has announced its plan to take necessary measures to develop the foreign exchange market, including a mandate for businesses and banks to apply risk-prevention measures in line with international rules./.