Friday, July 11, 2008
Vietnam's Asking Who?
"Vietnam introduced new measures likely to see its currency weaken against the U.S. dollar, as the government accelerates efforts to stave off a crisis sparked by rising inflation, which hit 27% in June. ... Prime Minister Nguyen Tan Dong earlier this week sought the advice of former [Fed] Chairman Alan Greenspan during a visit to the U.S. Mr. Greenspan told Mr. Dung that Vietnam's biggest mistake was its failure to mop up a surge in liquidity, according to a person familiar with their discussion. He also advised Mr. Dung to further restrict spending by state-owned firms. The government has suspended gold imports in a bid to reduce the country's growing trade deficit. ... Analysts said the wider trading band would mean a gradual slide in the official rate, set by the government each day, toward black-market rates already advertised at gold shops and foreign-exchange offices in Hanoi and Ho Chi Minh City. There a dollar buys 19,000 dong--nearly 15% more than Thursday's official level of about 16,000 dong..... Officials still have to contend with an inflationary influx of investment from foreign manufacturers, particularly those trying to escape rising costs in China", my emphasis, WSJ, 27 June 2008.
Hey Al, do you offer Helicopter Ben similar advice? What does "an inflationary influx of investment" mean? I thought increased production decreased prices.