Hanoi - The US dollar rose sharply against the Vietnamese dong Wednesday on the country's black market, as bankers cited fears that the government's economic forecast for 2009 was too rosy.

The government set its reference rate Wednesday at 16,600 dong to the dollar for those selling dollars.

But commercial banks were selling dollars for 16,986 dong each, while gold shops and black market traders were offering 17,430 dong to the dollar.

"The rising dollar stems from people's fears that Vietnam's economic growth for 2009 will be not as good as expected," said Phan Thanh Son, vice chief executive of Tien Phong Bank in Hanoi.

"People think that Vietnam's exports next year will shrink, so the supply of foreign currency will decrease, leading to a lack of dollars," said Nguyen Duc Vinh, chief executive of Techcombank, the fourth-largest commercial bank in Vietnam.

The Vietnamese government estimates the economy will grow by as much as 6.5 per cent in 2009, but a report of the International Monetary Fund last week forecast growth of just 5 per cent.

Sentiment has also been affected by a report Vietnam's Bank for Investment and Development released this week on how the country's trade deficit could affect exchange rates in 2009.

The report said Vietnam would likely show a trade deficit of about 7 billion dollars in 2009, which would lead the dong to fall 3.5 to 5 per cent against the dollar.

The exchange rate has also been affected by the global rise of the dollar since the onset of the financial crisis, as nervous investors pull money out of emerging markets like Vietnam.

Vietnam has seen a year of ups and downs in black market exchange rates.

The dong rose against the dollar in early 2008 due to large inflows of foreign investment. It then dropped sharply on the black market in late spring on fears of a currency crisis due to rampant inflation, at one pitting hitting a black market rate of 19,500 to the dollar.

The dong stabilized in the third quarter as inflation fell, before sliding again in the past two weeks. (dpa)