The recent devaluation of China’s renminbi and the slump in commodity prices were the two key factors behind Vietnam’s decision last week to widen the dong trading band with the dollar and the subsequent move by the Kazakh central bank to scrap its trading band for the tenge. These moves, and renewed market turmoil, have put other countries with currency pegs in the spotlight. Large foreign exchange reserves mean the Gulf’s currency pegs are unlikely to come under any real pressure. However, with commodity prices set to remain low, a number of countries in Africa, notably Nigeria and Angola, may be forced to allow their currencies to weaken.
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