AKIPRESS.COM - Vietnam devalued the dong for the third time this year and widened the currency’s trading band, the latest sign of stress in Asian exchange rates after China depreciated the yuan last week.

The State Bank of Vietnam weakened its reference rate by 1 percent to 21,890 dong a dollar and increased the scope for fluctuations to 3 percent on either side, after doubling the range on Aug. 12. The dong fell 1.2 percent to 22,360 as of 3:04 p.m. in Hanoi, extending its drop this month to 2.4 percent, according to data compiled by Bloomberg.

Prime Minister Nguyen Tan Dung is seeking to safeguard export growth and the State Bank said it’s concerned about the prospect of the Federal Reserve raising interest rates. While the latest devaluation will allow the dong to weaken without pressuring the central bank to intervene, further policy measures can’t be ruled out should the yuan depreciate sharply, according to Australia & New Zealand Banking Group Ltd.

Vietnam’s government bonds fell, pushing the five-year yield to 6.74 percent, according to a daily fixing from banks compiled by Bloomberg. That’s the highest rate since July 2014.

The widening of the dong’s band last week came a day after China’s surprise policy shift heightened the risk of a currency war. Vietnam posted a trade deficit of $300 million in July as export growth slowed to 9.5 percent in the first seven months of 2015, compared with 14.1 percent a year earlier.

The Vietnamese currency has declined 4.4 percent this year, putting the country’s exporters at a relative disadvantage to those in nations like Malaysia and Indonesia, whose currencies have fallen 15 percent and 11 percent, respectively.