Is Vietnam facing a currency crisis?
Investors have soured on Vietnam in recent months, sending the country’s benchmark stock index down nearly 60% and putting its economy increasingly at risk of foreign capital flight. Meanwhile, Vietnam’s year-to-date trade deficit in May — a whopping US$14.4 billion — exceeds the US$12.4 billion shortfall for all of 2007. Is Vietnam headed for a currency and balance of payments crisis? A number of emerging market analysts have sounded the alarm, but currency speculators may get burned if they are betting on the kind of rout that brought down the Thai baht in 1997. Though Vietnam’s black-market currency exchange rate has reportedly jumped to a record high of more than 18,000 dong per US dollar — the official rate last week was 16,268 dong — Vietnam can still avoid a currency crisis if the government restores macroeconomic credibility by acting quickly and decisively. Concerns are mounting about a currency crisis in Vietnam in the next 12 months. Yet the government should not have respon
