Friday, October 7, 2011

State Bank of Vietnam Raises Rate 100bps to 15.00%

The State Bank of Vietnam (SBV) increased the refinancing rate 100 basis points to 15.00% from 14.00% previously.  The overnight rate for interbank clearing operations also increase to 16% from 14%, and the rate on excess foreign currency reserves reduces to 0.05% from 0.1%.  The SBV said: "The adjustment of the above-mentioned interest rates mainly aims at ensuring the proper relationship between the SBV's benchmark rates and SBV's role as the last resort lender  in order to improve the efficiency of monetary policy and market management."

The Vietnamese central bank's recent moves include: a cap on bank deposit rates, an increase to the required reserve ratios on foreign currency by 100 basis points in June this year and lifted dollar reserve ratios 100 basis points in August.  The bank also increased its reverse repurchase interest rate by 100 basis points to 15.00% in May this year, and subsequently reduced the OMO rate by 100 basis points to 14.00%.  

Vietnam reported annual inflation of 22.42% in September, compared to 23.02% in August, 22.16% in July, 20.82% in June, 19.78% in May, and 17.51% in April this year, according to the General Statistics Office.  Vietnam's annual GDP growth rate in the March quarter was 5.43%, compared to 7.34% in Q4 2010, while Jan-Sep economic growth was 5.76%. The Vietnamese Dong (VND) is currently trading around 20,805 against the US dollar.

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