The revaluation of Chinese Renminbi (RMB) will slightly affect Vietnam's trade deficit, foreign investment and financial market, said an official from the State Bank of Vietnam (SBV).

The RMB's appreciation is expected to help Vietnam reduce its trade deficit with China, local newspaper Vietnam Economic Times on Monday quoted Le Xuan Nghia, Director of the Banking Development Strategy Department under the SBV as saying.

But, the reduction is not big due to Chinese goods' higher competitiveness compared with Vietnamese ones, he said. Vietnam posted a trade deficit of over 1.7 billion US dollars with China last year, increasing 21.4 percent over the previous year.

Regarding foreign investment, Nghia said: "In the long term, the appreciation will benefit Vietnam in attracting foreign investment."

Changes in the exchange rates of US dollars and Vietnamese dong against RMB are likely to make many potential foreign investors to shift their investment from China, which has higher competitiveness in luring foreign investment compared with some regional countries, to Vietnam, he noted.

For the financial market, the changes will not much impact on Vietnam's financial market in general and Vietnam's banking system in particular, because RMB, which has yet to be a convertible currency, is not used much for Vietnam's international payments or as a reserve currency of the country, Nghia said.

China revalued the exchange rate of the RMB to the US dollar by 2.1 percent to 8.11 last Thursday. Over the past few years, the RMB has been pegged to the US dollar at the rate of one dollar for 8.27 yuan.

Source: Xinhua