hot money

Vietnam’s central bank said on Wednesday it was devaluing the dong’s mid-point reference rate by more than 3 per cent to 18,544 per dollar from 17,941 effective on Thursday. The move was designed to help balance supply and demand of foreign exchange, increase the liquidity of foreign exchange in the market and contribute to controling the trade deficit and stabilising the macroeconomy, the bank told Reuters.

Vietnam devalued the dong by more than 5 per cent in November of last year.

Traders re-establishing short positions in the dollar may be causing the appreciation of the shekel, which officially closed at 3.736 yesterday. The Bank of Israel – which now only intervenes in unusual circumstances – bought between $200m and $300m at around 1200 GMT Tuesday, said dealers.

The currency closed 2009 at 3.775 to the dollar, with hardly any movement during December, a traditionally quiet trading month as traders seek to hold their positions. But the shekel has appreciated 1 per cent against the dollar over the first two sessions of 2010 and has now advanced for seven straight sessions. “Overseas banks have opened new positions and those positions are short dollar-shekel,” said a dealer at Bank Leumi. Read more