Vietnam's central bank declared Wednesday that it would devalue its currency-the dong by 5.44 per cent, effective Thursday.

The central bank will also increase its key interest rate from 7 per cent to 8 per cent, effective on December 1.

Speaking on the topic, economist Tai Hui said, "We have seen a significant amount of devaluation pressure on the dong in recent weeks. The rate hike is there to support the dong."

Trading band of the dong will also be curtailed from current 5 per cent to 3 per cent, effective Thursday.