Friday, June 3, 2011

State Bank of Vietnam Implements Series of Monetary Policy Measures

The State Bank of Vietnam implemented a series of monetary policy maneuvers to strengthen the Dong and address surging inflation.  The Bank lowered the interest rate cap on US dollar deposits by individuals to 2% from 3%, and reduced the limit for institutions to 0.5% from 1%.  The Bank also increased the reserve requirement ratio on US dollar deposits by 100 basis points to a range of 4% to 7%.  In addition the State Bank of Vietnam ordered state-owned businesses to sell all of their foreign currency.

The central bank last increased its reverse repurchase interest rate by 100 basis points to 15.00% in May this year.  Vietnam reported annual inflation of 19.78% in May, up from 17.51% in April this year, according to the General Statistics Office.  The Dong is currently trading around 20,550 against the US dollar.

1 comment:

  1. Policy measures need to be reviewed. This is to come up with an ideal range of interest charges.