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Monday, 16 June 2008

The 'dong' & the 'piastre'. Vietnam devalues.

http://business.timesonline.co.uk/tol/business/economics/article4143529.ece

From The Times
June 16, 2008
Vietnam devalues as currency speculators move



Rhys Blakely

Vietnam is on the brink of a currency collapse that could mirror the rout of the Thai baht that sparked the Asian crisis in 1997, economists say.
The State Bank of Vietnam effectively devalued the dong by 2 per cent against the dollar last week, a move that analysts said was designed to head off a speculative attack on the currency.
The move highlighted concerns that Vietnam, where consumer price inflation is running at more than 25 per cent, is poised to suffer an exodus of foreign-controlled capital. The country's benchmark equities index has lost 60 per cent of its value since January, making it the world's worst-performing stock market. Vietnam's trade deficit for the first five months of the year stood at $14.4 billion (£7.4 billion), compared with a $12.4 billion shortfall for the whole of 2007.

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When I arrived in South Vietnam the currency was the piastre. The United States army was still using the dollar and every month we received our ‘per diem’ that is spending allowance in dollars. This was $20 a day at that time. This was for the PX and to change on the black market at our Indian money changers. They were all in the cloth or tailoring business.

Of course military script was then brought in to replace the dollars. Inflation was terrible. When I arrived in July 1975 a taxi ride to Tan Son Nhut cost 17 piastres from the Hôtel Continental. I would give a 20 piastres note and say ‘keep the change’. I know within two or three years this had gone up to 300 piastres and then there would be a bitter argument. (we always asked for ‘ la porte militaire’, where we walked straight onto the military airbase without any ID controls at all).

Whilst ones salary or expenses were in dollars and one changed on the black market life was very cheap. When later I lived on the local economy and was paid in piastres it became more and more expensive.

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