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Currencies

Vietnam central bank willing to intervene after dong hits record low

Currency's drop attributed to strength of dollar and decline in Vietnamese stocks

With Vietnam's foreign reserves swelling to new records -- more than $63 billion as of the end of June -- the central bank says it has the necessary tools to ensure market stability.   © Reuters

HANOI (Reuters) -- Vietnam's central bank is willing to intervene in the foreign exchange market to ensure stability, its governor said on Monday after the dong currency fell to a record low last week.

The dong hit 22,965 to the dollar on Friday, a drop that the central bank attributed to the U.S. currency's rise on global markets and recent falls on the Vietnamese stock market.

"The State Bank of Vietnam (SBV) ... stands ready to intervene in the foreign exchange market," the central bank quoted governor Le Minh Hung as saying in a statement on its website.

"Currently we have all necessary tools and plans to intervene in the foreign exchange market, ensuring the control of macroeconomic stability," the statement said.

Vietnam's foreign reserves have been hitting fresh record highs this year, standing at around $63.5 billion by end-June, up $11 billion from December last year, the statement said.

Foreign direct investment inflows rose 8.4 percent in the first half of 2018, while the Southeast Asian nation posted a trade surplus of $2.7 billion in the six-month period.

The stock market benchmark VN Index fell as low as 932.66 points on Monday, an intra-day level unseen in more than a month. The index has been retreating from a historic high hit in April of 1,211.34, Reuters data showed.

SBV said it will observe the market closely and is ready to sell foreign currency even at lower-than-market levels to ensure market and macroeconomic stability, the bank said in a separate statement on Monday.

The dong recovered slightly on Monday, trading at 22,952 to the dollar, Reuters data showed.

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