Hanoi - Vietnam's central bank said the country's currency had stabilized and projected the 2008 trade deficit would be less than 20 billion dollars, state media reported Tuesday. State Bank Governor Nguyen Van Giau said foreign currency reserves were sufficient to cover the trade deficit and would be bolstered in coming months by rising export revenues and remittances from Vietnamese working abroad.
Giau also predicted in an interview on the government's website that the exchange rate of the Vietnamese dong against the US dollar would remain stable.
"The imbalance of the foreign currency supply and demand is temporary and caused by speculation and rumors," Giau said.
The dong has stabilized against the dollar in recent weeks with the black market exchange rate falling to roughly the same as the official exchange rate of 16,450 dong to the dollar.
In May and June, some analysts had predicted that Vietnam's high inflation and trade deficit could lead to a currency crisis, such as the one that hit Thailand in 1997, causing the baht to plummet. But HSBC and Standard Chartered banks now predict the dong would rise slightly against the dollar by early 2009.
Giau also referred to the government's decision over the weekend to stop licensing new joint-stock banks. Excessive lending by new private banks in 2007 was seen as one of the chief sources of rising inflation and led to fears that some banks might fail.
The governor said the freeze on new banks was intended to "ensure that future joint stock commercial banks are financially strong and can compete well in the face of international economic integration."
