Vietnam may continue to devalue its currency by another 4 per cent this year to spur exports and stabilize its foreign-currency market, said the Saigon Securities Joint-Stock Co (SSI).

The Southeast Asian country had already reduced the dong’s value twice in the past six months, narrowing the gap between the official rate and that in the black market from as much as 12 per cent. However, the risk from the trade and balance of payments deficits remains, said Nguyen Duy Hung, SSI’s chairman.

He added that the currency’s devaluation would help Vietnam achieve its 6.5 per cent growth target this year, up from 5.3 per cent in 2009, and stop a haemorrhaging of the country’s foreign-exchange reserves.

Recently, the State Bank of Vietnam, the country’s central bank, said that it aims to limit Vietnam’s trade deficit to a maximum of 20 per cent of exports. For the first four months of 2010, the gap stood at US$4.65 billion, equivalent to 23 per cent of overseas sales.

However, in April, the gap increased by 8 per cent over the previous month to US$1.25 billion due to an increase in imports as a result of the expanding economy.

Central bank Deputy Governor Nguyen Van Binh said the currency will be managed in a flexible manner based on supply and demand. He added that foreign- currency sources are expected to improve this year, especially tourism and remittances, even though the trade deficit is still high. He also said that there are signs of foreign indirect investment capital increasing.