Last Friday the central bank doubled the dollar/dong trading band to +/- 2 percent, allowing more room for banks to meet corporate dollar demand.

The official rate meant Vietnam has allowed its non-convertible dong to fall 2.46 percent against the dollar so far this year, even though the government had said it would allow the dong to rise or fall 2 percent for the whole of 2008.

Given the 2 percent band, the dong (VND) could move between 16,190 dong to 16,850 dong on Friday's interbank markets, against 16,843/16,848 dong per dollar in its last trade on Thursday.

The central bank says it wants to close the gap between the spot rates between banks and those on the unofficial markets where the domestic currency edged up to 17,400/17,500 dong per dollar on Thursday from 17,600 dong at the start of the week.

Vietnam's trade deficit, which is putting pressure on the dong, nearly tripled in the first-half of 2008 to $14.78 billion compared with a year earlier, the government has said.

Source: Reuters