Emailed 14th August 2015
I got the answer overnight when Vietnam announced it would widen the dong’s trading band on Wednesday to further weaken the Dong in response to the comparable shrinkage by China, its biggest trading partner.
The immediate result: the latest dong prolapse, which shrank just as expected as part of its entry in the currency wars joined by China Tuesday.
The newly lubricated dong can therefore now slide as much as 2% on either side of the fixing channel, up from 1 percent previously, the central bank said in a statement – while under similar circumstances comparably named instruments, either monetary or anatomical, seek expansion, the Vietnamese monetary unit promptly weakened 1% to 22,040 a dollar as of 2:16 p.m. in Hanoi.
Please take note – action is a similar action undertaken by China before their devaluation of the Yuan – it will not take them long to actually devalue the Dong if this does not get the desired effect.
From my understanding of the markets – it will not work – they will devalue within the next week and or month.
Sent from my iPad