The Fitch downgrade of Vietnam’s foreign currency debt, announced today, was no surprise. Over the last six months domestic policies have see-sawed between fighting inflation and boosting growth while the balance of payments, although on a improving trend, remains far weaker than elsewhere in Asia. GDP growth will probably hit or exceed the government target for 2010 but higher interest rates and another currency devaluation still look needed to keep the economic upswing on track in 2011.