Fed’s latest rate decision won't have significant impact on Việt Nam

The dollar depreciation is also a good sign for Việt Nam’s import activities, with global raw material prices expected to decrease and inflationary fears for imports receding.
Fed’s latest rate decision won't have significant impact on Việt Nam
A bank teller counts US dollars at a transaction office in Hà Nội. The Fed's decision to leave interest rates unchanged has taken some heat off the currency, which is a good sign for Việt Nam's import activities. Photo cafef.vn

Though the latest US Federal Reserve (Fed)’s interest rate decision will not have a major impact here in Việt Nam, the move is still a positive signal for the economy, experts said.

Last Wednesday, the Fed held its benchmark interest rate steady in the 5.25-5.50 per cent range, for a seventh consecutive meeting.

The Fed’s decision to continue to keep rates on hold, is in direct contrast to Việt Nam, one of the few countries that has gone in the opposite direction, reducing interest rates many times since last year, with a decrease of 0.5-2.0 percentage points per year.

The Vietnamese đồng has been relatively stable compared to the US dollar and the country's monetary policy has been also proactively independent for the past few years.

The State Bank of Vietnam (SBV) will certainly continue to be flexible and act proactively, managing monetary policy tools to control inflation and support the economic recovery.

Dr. Lê Duy Bình, Managing Director of economic consulting firm Economica Vietnam, said that although the Fed’s recent decision will not have a great impact, it is still a positive signal for many economies, including Việt Nam.

The move shows that inflation in the US has cooled somewhat, after being at peak levels for quite a long time and many countries now expect that the Fed will continue to successfully control inflation.

If the Fed lowers interest rates in the near future, it will create excitement for many economies and Việt Nam is no exception because there is less pressure to adjust interest rates, Bình said.

Bình added the Fed's move has partly cooled the dollar. The dollar index (DXY) dropped to 104.4, from the previous level of more than 105.

The dollar depreciation is also a good sign for Việt Nam's import activities, with global raw material prices expected to decrease and inflationary fears for imports receding.

However, Bình noted, the most important thing is still how the SBV manages interest rates and exchange rate policies over the short term, to proactively respond to changes by the Fed and other major central banks.

An economic growth forecast for the second quarter of 2024, released recently by the United Overseas Bank (UOB)'s Global Economics and Market Research, is optimistic about Việt Nam's currency market in 2024, predicting that interest rates will stay low.

According to the report, instead of interest rate changes, the SBV is focusing on promoting growth to support economic activities, especially new growth areas, green transformation, the circular economy and social housing.

UOB’s analysts believe the SBV will keep the refinancing interest rate at the current rate of 4.5 per cent and focus efforts on supporting credit growth.

The SBV’s latest forecast, released at the end of May, said the central bank wants to increase credit growth by 5-6 per cent by the end of the second quarter of 2024 and reduce lending interest rates by 1-2 percentage points through simple lending procedures, cost-saving measures and digital technology applications.

Source: VNS
vietnamnews.vn

Related News

Latest News

Corporate bond issuance soars in comparison to 2023

Corporate bond issuance soars in comparison to 2023

VCN - According to the Ministry of Finance, from the beginning of the year to June 21, 2024, 41 enterprises have issued private corporate bonds with a total value of VND 110.2 trillion.
Tax debt recovery is estimated to achieve VND 45,468 billion

Tax debt recovery is estimated to achieve VND 45,468 billion

VCN - In the first half of 2024, tax authority at all level has issued 16,859 notifications on temporary exit suspension and recovered VND918.7 billion of tax debt from 1,482 taxpayers.
Public accounting standards publication contributes to spreading investment attraction

Public accounting standards publication contributes to spreading investment attraction

VCN - According to a World Bank (WB) expert, the publication of public accounting standards not only helps strengthen the sustainability of the financial system but also creates a ripple effect in attracting private sector and foreign investment.
Another six months for debt restructuring but need to manage bad debt risks

Another six months for debt restructuring but need to manage bad debt risks

VCN - The decision to continue extending the debt restructuring period, keeping the debt group unchanged for another six months, is expected to continue to contribute to solving difficulties for businesses, reduce debt repayment pressure, and add resources for production and business recovery.

More News

Promote  information transparency to increase large-scale investors in  stock market

Promote information transparency to increase large-scale investors in stock market

VCN - Deputy Minister of Finance Nguyen Duc Chi talked with Customs News about the goal of upgrading Vietnam's stock market and solutions to achieve this goal by 2025.
Ministry to release final draft circular on stock market upgrades

Ministry to release final draft circular on stock market upgrades

The Ministry of Finance is set to announce the final draft of a circular related to the upgrade of Vietnam's stock market and operate the Korea Exchange (KRX) system this week.
Ensure price stability associated with macroeconomic stability

Ensure price stability associated with macroeconomic stability

VCN – To stabilize market prices from now until the end of the year, especially implementing the salary reform, the Ministry of Finance will implement solutions and respond to ensure price stability associated with macroeconomic stability.
Minister of Finance: continue to advise on promulgating fiscal policies to help economy recover and develop

Minister of Finance: continue to advise on promulgating fiscal policies to help economy recover and develop

VCN - According to Minister of Finance Ho Duc Phoc, although implementing policies to reduce and extend taxes and fees will impact budget revenue, the Ministry has reviewed, evaluated and continued to promulgate a number of fiscal policies to support people and businesses.
Vietnam rises 11 places in budget transparency ranking

Vietnam rises 11 places in budget transparency ranking

VCN - The results of the Open Budget Survey 2023 (OBS 2023) have just been announced by the International Budget Cooperation (IBP), Vietnam's budget transparency ranking continues to be raised to 57 out of 125 countries, climbing 11 places compared to the 2021 assessment period and rising 20 places compared to 2019.
Total budget revenue in first half of year reaches 60% of estimate

Total budget revenue in first half of year reaches 60% of estimate

VCN - According to the Ministry of Finance, total state budget revenue in the first six months of the year was quite good and grew over the same period last year. This results in effective implementation of tax laws and state budget collection tasks, revenue management, and anti-revenue loss of the Ministry of Finance. Along with that, the Ministry of Finance actively deployed policies to help remove difficulties for businesses and people.
Adding goods item subjected to special consumption tax

Adding goods item subjected to special consumption tax

VCN - According to Ministry of Finance – drafting agency, one of the purposes of amending Law on Special Consumption Tax this time is to perfect regulations on special consumption tax policy to expand the collection base and ensure transparency, ease of understanding, and ease of implementation to contribute to improving the capacity and efficiency of tax management activities. To achieve this goal, the draft Special Consumption Tax Law has many amendments on taxable objects.
The "compass" for policy credit

The "compass" for policy credit

VCN - Directive No. 40-CT/TW issued on November 22, 2014, by the Central Committee of the 11th Party Congress, focusing on enhancing the Party's leadership over social policy credit, is recognized as a sound policy by both the Party and the State, becoming a "compass" for policy credit activities.
Vietnam well-positioned towards cashless society: UK newswire

Vietnam well-positioned towards cashless society: UK newswire

Vietnam's digital payment ecosystem is undergoing a remarkable transformation, driven by a tech-savvy population, government initiatives, and innovative financial solutions, according to finextra.com, a leading UK newswire and information source for worldwide financial technology.
Read More

Your care

Latest Most read
Corporate bond issuance soars in comparison to 2023

Corporate bond issuance soars in comparison to 2023

According to the Ministry of Finance, from the beginning of the year to June 21, 2024, 41 enterprises have issued private corporate bonds with a total value of VND 110.2 trillion.
Tax debt recovery is estimated to achieve VND 45,468 billion

Tax debt recovery is estimated to achieve VND 45,468 billion

In the first half of 2024, tax authority at all level has issued 16,859 notifications on temporary exit suspension and recovered VND918.7 billion of tax debt from 1,482 taxpayers.
Public accounting standards publication contributes to spreading investment attraction

Public accounting standards publication contributes to spreading investment attraction

VCN - According to a World Bank (WB) expert, the publication of public accounting standards not only helps strengthen the sustainability of the financial system but also creates a ripple effect in attracting private sector and foreign investment.
Another six months for debt restructuring but need to manage bad debt risks

Another six months for debt restructuring but need to manage bad debt risks

VCN - Circular 06 has allowed an extension of six months to implement the solution to restructure the debt repayment period and maintain the debt group according to Circular 02 until December 31, 2024.
Promote  information transparency to increase large-scale investors in  stock market

Promote information transparency to increase large-scale investors in stock market

VCN - The upgrade of Vietnam's stock market from frontier market to emerging market is both a goal and a task not only of the Ministry of Finance or the State Securities Commission (SSC), but also the task, the goal and the interests of all market partici
Mobile Version