VINACHEM

Vietnam’s dong has been the third most stable Asian currency this year, depreciating by just 1.5 percent against the US dollar, HSBC’s Vietnam chief said.

News website Saigon Times quoted Sumit Dutta as saying at a conference on Vietnam’s economic outlook November 30 that his estimate was based on Bloomberg data.

The US Federal Reserve”s announcement in July that it plans an early end to its dollar-printing program — euphemistically referred to as quantitative easing — led to large withdrawals from Asia by portfolio investors, causing currencies to plunge against the dollar.

But the dong fell little, with only the Chinese yuan and Hong Kong dollar falling less, and HSBC said this stability was a bright spot in the economy.

Trinh Nguyen, an economist at the bank, attributed the strength to a decreased trade deficit.

The bank expects the trade balance, which edged up to a slight surplus last year from two decades of deficits, to be $600 million in the black this year.

Tight monetary policies in 2011 helped curb domestic demand, leading to decreased imports. But the government has since loosened credit to aid economic growth.

Nguyen also attributed the stability to a rise in foreign investment.

FDI was worth $19.23 billion as of last month, a 66 percent year-on-year rise and much higher than the full year’s target of $13-14 billion.

The country is not as attractive to portfolio investors as some others in the region, which means less reliance on this unstable source of foreign exchange, Nguyen said.

HSBC said Vietnam’s foreign reserves would top $30 billion this year and $35 billion in 2014.

It expects the dong, which quoted at around 21,120 on October 30, to drop to 21,250 by year end and to 21,500 by the end of 2014.

ANZ has forecast the drop to 21,500 to occur by mid-2014.

Both banks forecast the economy to grow at 5.2 percent this year.

Nguyen said the economy, which last year saw the slowest growth rate in 13 years — of 5.03 percent — has bottomed.

But there is a lot of work ahead for the government, she warned.