Shares on the nation’s two stock exchanges retreated last week on false rumours related to a devaluation of the dong, petrol prices increasing and that the Bank for Investment and Development (BIDV) chairman Tran Bac Ha had been arrested.

As a consequence, more than US$1.6 billion in capitalisation evaporated from the stock market.

For a start, it was wrongly circulated that the Vietnamese dong would be devalued against the US dollar, which pushed the exchange rate to VND21,000 per US$1 on Thursday.

The central bank dismissed the rumour, saying it had not thought of lifting the exchange rate at present because of the affect on inflation.

Meanwhile, the bank had abundant foreign currency reserves and could intervene in the market at any time.

Regarding the petrol price, there has not been an official report that petrol prices will rise. The rumour was mere speculation.

But the more serious rumour was about BIDV’s chairman. A statement refuting the report was made late in the day, helping calm investors during last Friday’s session.

The Ministry of Public Security said it had begun investigations to find out who started the rumour and to bring them to justice.

Other information to discourage investors was the loss of VND1.2 trillion ($57.1 million) by PetroVietnam Construction Co (PVX). PVX is one of the leading shares on the Ha Noi Stock Exchange. The share was heavily traded at its floor price since the report..

On the Ha Noi Stock Exchange, the HNX-Index lost 3.16 per cent over the previous week, fetching 64.12 points. However, trading value and volume soared around 67 per cent, averaging VND840 billion ($40 million) and 100.8 million shares.

Meanwhile on the HCM City Stock Exchange, the VN-Index dropped 3.3 per cent to 477.69 points, compared to the previous Friday’s close.

Market value averaged at VND1.36 trillion ($64.7 million), jumping 26.8 per cent over the previous week.

Increased profit-taking on blue chips stalled the rally in some sessions. The positive point was the flow of speculative cash.

Transactions by foreign investors continued to support the market in the first sessions of the week. The foreigners concluded as buyers on both exchanges with a combined margin worth up to VND300 billion ($14.2 million).

Late last week, the nation’s consumer price index in February increased 1.32 per cent compared to the previous month, mainly due to the consumption of foodstuffs during the Tet holiday.

This compares favourably with the CPI in February 2011 at 2.03 per cent and in 2012 at 1.37 per cent, said PetroVietnam Securities Co analyst Dao Hong Duong.

“This month’s CPI poses little threat despite its height,” Duong said.

The State Bank said if inflation this year was controlled below 6 per cent, interest rates would continue to fall.

VNS