The Vietnamese central bank has devalued its currency by about 9.3 per cent, the third devaluation of the dong in a year and the sharpest since at least 1993. Despite high inflation, the State Bank of Vietnam fixed the currency’s reference rate at 20,693 per dollar today versus 18,932 yesterday.
The move is an attempt to address the gap between official and black market exchange rates, which was roughly 8.5 per cent yesterday. A weaker dong will also help exporters and should address the country’s trade deficit.
But the devaluation could be disastrous for inflation, already high at 12.2 per cent last month. The target is 7 per cent. The move suggests the bank is prioritising growth over inflation, which is supported by recent comments from the government. “One of our top priorities now is to stabilize the macro economy in order to maintain the pace of growth,” Bloomberg quotes Nguyen Van Thao, deputy chief administrator of the ruling Vietnamese Communist Party’s Central Committee, saying on January 19. Read more
Today’s news that durable goods orders jumped by 2.9 per cent in April, which was almost double the rate expected by economists, was the latest reminder that US exporters are among the stars of this recovery.
Coming out of the global recession, demand for big-ticket items including cars, aircraft, and heavy equipment with a long shelf life has been steadily picking up not only in the US, but also in many of America’s largest export markets. So to what extent will the eurozone crisis affect their competitiveness, as the dollar strengthens against the euro and US products become more pricey? Furthermore, to what extent will slower growth and fiscal retrenchment in the eurozone undermine demand for US goods? Read more
Japan’s export figures for February are out today and they show that recovery is continuing. Fine.
We all hear a lot about the limited growth opportunities of the PIGS – Portugal, Italy, Greece and Spain and go-go growth in the BRICs – Brazil, Russia, India and China. It’s a shame, therefore that the PIGS are far more important for UK exports than BRICS.
A shame, but true. Britain exports twice as much to Spain as to China, for example. Here is the chart.
The better news – though it is too late for this recovery – is that the export shares are moving slowly but consistently towards BRICs from PIGS – below is that chart: Read more
Today’s European Commission confidence indicators provide further reassurance that the region’s recovery remains on track. The eurozone’s economic sentiment indicator continued its v-shape rebound, rising to the highest since June 2008. But there are some interesting divergences – and not just between the big northern European economies and Spain, Ireland, Greece etc.
I was struck by the part of the survey covering manufacturers’ expectations for exports in coming months (which is included only four times a year). German industry is seeing optimism about overseas demand for its products soaring. January’s reading was the highest since the third quarter of 2007 and noticeably better than in the other main eurozone economies. Read more
The real export data produced by the Bank of Japan (and hidden away on their website) is the best way to keep track of what is going on in the most crucial sector of Japan’s economy.
The more popular Ministry of Finance data are not adjusted for export prices, although as it happens, both sets tell the same story for December: that weaker figures the month before were a blip. Read more
German exporters remain confident despite the rising euro, writes Ralph Atkins of the Financial Times Read more
“Slightly worried”: Finnish understatement on the possibility of a soaring euro, in an economic update from the Nordic countries by Ralph Atkins of the Financial Times Read more