Vietnam's central bank raises policy rates by 100 bps to combat inflation

Accordingly, the refinancing rate will rise to 6% on Tuesday, while the discount rate will rise to 4.5%, according to a statement from the State Bank of Vietnam.

Vietnam, like most of its neighbors, has seen rising inflation and seen its currency suffer in recent months, with the dong shedding 9% versus the dollar this year.

The central bank stated that global inflation remains strong and that the US Federal Reserve has lately raised interest rates five times, with additional rises projected this year and in 2023.
"This, together with the strengthening of the dollar, has put pressure on domestic interest rates and the exchange rate," SBV said late Monday.

As rising energy costs and global supply difficulties add to inflationary pressures, Prime Minister Pham Minh Chinh indicated last week that Vietnam will keep prices in line and pursue flexible, sensible monetary policy throughout next year.

Vietnam's main stock index fell 3.3% to its lowest level since January 2020, rebounding marginally from a 4.1% drop earlier in the day. In early trade, the dong fell to a new low for the 13th straight session.

The SBV stated that it would constantly watch domestic and international markets in order to "timely manage" policies and monetary tools.

It stated that it was prepared to act in monetary and foreign currency markets "to address the liquidity needs of financial institutions."

Source: Reuters