Vietnamese central bank adjusts interest rate

VGP – The State Bank of Việt Nam (SBV) announced on Wednesday that it would raise both interest rates and exchange rates with a view to supervising credit and mobilizing more capital for the economy.

November 25, 2009 4:32 PM GMT+7

Raising the benchmark rate is an effective measure to slow ”hot” credit growth – Illustration photo

The SBV raised the benchmark rate and refinancing rate one percentage point to 8% while lifting the discount rate to 6% from 5%.

The decision will come into effect since December 1, 2009.

The SBV fixed the reference rate between Vietnamese dong and US dollar at VND 17,961/US $1. The policy makers also narrowed the daily trading band for VND/US$ to 3% from 5%. The move will be effective tomorrow.

Based on the adjustments, the floor and ceiling rates of exchange will be VND 17,422 and VND 18,500 per US $1 respectively.

The raising of interest rates is to lower “hot” credit growth, meet macro-economic targets sponsored by the National Assembly and the Government, and mobilize more capital flows, said SBV Governor Nguyễn Văn Giàu.

According to experts, the narrower range of exchange rate is a necessary way to stabilize the exchange rate commensurate to new interest rates, CPI increase and international balance of payment.

By Hương Giang