Barclays Capital has rejected as “unjustified” the negative watch placed on Vietnam’s sovereign rating last week by Fitch. Bloomberg reports regional economist Prakriti Sofat as saying in a note: “The Fitch rating outlook change to negative is hasty and short-sighted.” She adds: “When the State Bank of Vietnam devalued the dong in early February, spot Vietnamese dong did not immediately jump to the top end of the new band, as was the case in previous devaluations, which suggests underlying pressures were not that stretched.”

Fitch placed their long-term local and foreign currency issue rating of BB- on negative watch, meaning that, with no further change, a downgrade would be imminent. The ratings agency cited a deterioration in confidence in the Vietnamese dong and a lack of financial transparency among its concerns. Read more