The State Bank of Viet Nam (SBV) on Wednesday allowed the Vietnamese dong to be traded more flexibly within a widened trading band in response to China’s depreciation of its currency, the Chinese yuan.

China, Viet Nam's top trading partner, devalued the yuan by nearly 2 % on Tuesday.

The SBV, which is Viet Nam’s central bank, gave the green light for the trading band for interbank dollar/dong transactions to move from 1% to 2% to ensure the competitiveness of Vietnamese goods, it said Wednesday on its website.

A file photo shows a Vietnamese customer counting U.S. dollars at a bank's counter in Ho Chi Minh City. Tuoi Tre

With the recent move of the central bank, dollar/dong transactions can fluctuate within a band of plus or minus 2% around the midpoint, which the SBV sets daily.

The mid-point has been held at 21,673 dong per dollar since May 7, when the SBV devalued the local currency by 1% for the second time this year, aiming to spur exports and curb demand for imports that has left it with a hefty trade deficit, Reuters said.

The new trading band allows a range from VND21,240 to VND22,106 to the greenback.

Almost all local financial institutions immediately adopted the latest trading band and quoted ask prices of the U.S. dollar at over VND22,040-22,100.

(Source: tuoitrenews)