While observers worry about possible government intervention in the consumer markets if inflation becomes an issue, Vietnam could potentially strike a free-trade deal that could open up markets and benefit Vietnam’s exchange traded fund (ETF).
In Vietnam, Tet, or lunar new year holiday, helped push the consumer-price index up to 2% in February, according to The Economist.
Before Tet, the Central Bank devalued the Vietnamese currency, the dong, by 3.4% in an attempt to get holders of the dollar to buy it. Vietnam may have spent more than $1 billion, over 1% of GDP, in 2009 to buttress its economy, and the credit supply expanded 37%, which increased the black-market price of dollars. [Vietnam Poised to Rebound on Exports.]
Observers will be closely watching March’s inflation data for evidence of whether February’s increase was holiday-driven. Foreign businesses are worried about the government’s response if inflation were to take off – the finance ministry has been hinting at a draft decree that would allow it impose price controls on a range of essential goods.