In the past month Vietnam's policymakers have again tried to recalibrate the economy, devaluing the dong for the fourth time in 14 months and gradually tightening monetary policy in order to buttress the currency at its new, lower level. The goal appears to be to defeat the widely held assumption within Vietnam that there will be further devaluations in the months to come, a phenomenon that has encouraged many people to speculate in gold, real estate or foreign currencies. The State Bank of Vietnam (SBV, the central bank) has adjusted the dong's peg to the US dollar from D18,932:US$1 to D20,693:US$1, a devaluation of 8.5%. The central bank has also narrowed the band in which it is traded, announcing that the inter-bank market rate will be allowed to fluctuate daily by no more than 1% (either side of the official rate), compared with 3% previously. When making its announcement on February 11th the SBV gave two reasons for the policy changes: "controlling the trade deficit" and "facilitating the implementation of a more active and flexible monetary policy". On February 24th the central bank also announced that all SOEs would be required to sell all their US dollars to banks, in an attempt to stop hoarding of the US currency. It appears that the SBV hopes that the devaluation will help bring the rates for the US dollar in the grey market (the legal but unofficial market) to closer alignment with official rates, making it easier for companies to source foreign currency to pay import bills.

The initial devaluation announcement, which was made shortly after the Tet (Lunar New Year) holidays, was not accompanied by any measures to tighten monetary policy (a policy tightening was not announced until a week later). This misstep fuelled concerns about the impact of Vietnam's already high rate of inflation on the exchange rate and unsettled investors, who remain anxious about the standards of economic policymaking in Vietnam. A week later, on February 17th, the SBV announced measures aimed at tightening monetary policy. The central bank put up the refinance rate-the lending rate on one of two main lending facilities of the central bank, used on short term loans-by 200 basis points, to 11%. This was followed by an increase in the reverse repo rate (the rate of interest charged by the SBV during open market operations) of 100 basis points, to 12% on February 22nd. Since early November 2010 the central bank has raised the latter rate for seven-day repurchase agreements by 500 basis points (and has stopped conducting 14- and 28-day transactions) in an attempt to squeeze liquidity in the banking sector. On March 1st the SBV announced that banks are required to reduce loans made to the "non-productive sector" (such as real estate and securities) to 22% of total credit by June 30th and 16% by the end of the year. Banks that fail to do so could have their reserve requirements, currently between 1-3%, doubled, the central bank warned. These measures taken together will have the effect of encouraging banks to be more cautious in their lending, and while these will eventually feed through to the interest rates that banks charge their customers, they do not reflect the immediate toughening of Vietnam's monetary policy stance that many observers were hoping for.