Vietnam will expand its fledgling foreign currency market early next year, state

(central) bank governor Cai Si Kiem has said.

He also said the planned stock exchange, which the government hopes to launch next

year, would begin by trading in government bonds before going on to deal in shares.

Vietnam now has no secondary market for bonds and treasury bills.

Kiem's remarks to the trade union newspaper Lao Dong firmed up projected timing for

launching the two projects, key elements in government efforts to adapt the communist

economy to market principles.

He said that on the basis of existing "foreign exchange transaction centres"

in Hanoi and Ho Chi Minh City, "a foreign exchange rate market will be made

operational in early 1994". He did not say what the formula would be.

At the existing centres, the state bank gauges supply and demand from a limited number

of participants and fixes rates for the national dong currency against the US dollar

which apply until the next session of each centre.

Kiem said it would take two to three years to get the stock exchange going. From

now until the end of 1994, "we will focus on preparation of conditions for the

launch of a stock exchange with transacting bonds its main operation," he said.

He did not say exactly when the market, originally planned by the end of this year,

would be launched.

From 1995 to 1996, he said, the exchange would be perfected and "conditions

created for it to operate mainly as a share market which is usual world practice".

Kiem said the government would set up an independent regulatory council to oversee

stock exchange operations.