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The dong currency will now be able to fall or rise a maximum of 2% around its official daily trading rate against the U.S. dollar, Vietnam said on Tuesday. This appreciation will have an impact on any currency trading exchange traded funds (ETFs) that hold Assets from Vietnam. Vietnam said a more flexible foreign exchange trading regime is needed to manage one of Asia's most rapidly growing economies. The band was also widened back in March when the central bank increased it to 1% from 0.75%. The Vietnamese State Bank said will continue to intervene in currency markets to maintain the exchange rates at reasonable, stable levels and will always meet the demand for foreign exchange from the countries economic HSBC said a wider band should allow for quicker and greater currency appreciation. This appreciation would help combat Vietnam's spiraling inflation, but in the short run, the dong may very well weaken. Previous extensions of the trading band, as indicated back in March of this year, but also in December 2007 of, were interpreted by funds and analysts as attempts to allow the currency get inflation under control and to allow the currency to appreciate and get inflation under control. Inflation in Vietnam was over 25% in May, and was driven by fast rising rice and oil prices as well as a general overheating of the economy.
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