VNBusinessNews – Vietnam’s dong weakened at money changers as the nation’s worsening economic outlook prompted investors to favor dollars.

Pledges of foreign direct investment in January fell 88% from a year earlier to US$200 million, according to the Ministry of Planning and Investment. Exports plunged 24 percent last month to $3.8 billion, according to an official estimate.

“People’s sentiment toward the dong is rather grave,” said Do Ngoc Quynh, deputy director of treasury in Hanoi at Bank for Investment & Development of Vietnam, known as BIDV. “Major economic indicators fell in the first month of the year, and that may undermine people’s confidence in the local currency.”

The dong traded at VND17,654 at money changers Tuesday, compared with VND17,620 Monday, according to a telephone directory information service, known as 1080, run by state-owned Vietnam Posts and Telecommunications.

The currency was VND17,480.50 per dollar as of 3:43 p.m. in Hanoi, little changed from VND17,485 Monday, according to interbank quotes compiled by Bloomberg. The State Bank of Vietnam fixed Tuesday’s reference rate at VND16,977, limiting dong moves to 3% either side of that level.

The yield on the benchmark five-year government bond was little changed Tuesday at 8.61%, compared with 8.6% Monday, according to a daily fixing price from seven banks compiled by Bloomberg.

The government plans to increase bond sales this year to finance state projects, a factor that may limit gains in the securities, Sai Gon Tiep Thi newspaper reported Tuesday. (Bloomberg)