Vietnam Dong Drops, Capping Worst Year in 10, as Economy Cools

Vietnam’s dong declined today versus the U.S. dollar, contributing to the currency’s biggest annual loss in a decade, as the government reported the slowest economic growth since 1999.

Gross domestic product rose 6.2% in 2008, according to the General Statistics Office in Hanoi, slowing from 8.5% growth in 2007. The expansion fell short of a 6.7% government target, which earlier in the year had been set as high as 9%.

The currency was at 17,483 per dollar as of 9:15 a.m. local time, compared with 17,469.50 yesterday and 16,002.50 at the end of 2007, according to data compiled by Bloomberg. It’s lost 8.5% this year.

The State Bank of Vietnam fixed today’s reference rate at 16,977, versus 16,980 dong per dollar yesterday, according to the bank’s Web site. The currency is allowed to trade by as much as 3% on either side of the official rate.

The Southeast Asian nation’s five-year government bonds fell the most in five months yesterday, with the yield climbing 28 basis points to 10.07%, according to a daily fixing price from 10 banks compiled by Bloomberg. A basis point is 0.01 percentage point. (Bloomberg)