SBV sets initial goals for 2017 monetary policy operating

The State Bank of Vietnam (SBV) has released the operating results of monetary policy and the initial orientations for 2017. According to the agency, in the first 11 months of...

The State Bank of Vietnam (SBV) has released the operating results of monetary policy and the initial orientations for 2017. According to the agency, in the first 11 months of 2016, the total means of payments grew higher than the same period but did not put pressure on inflation. The core inflation remained stable while the Consumer Price Index (CPI) rose fast mainly due to the price increases of the commodities managed by the State.

As of November 22nd 2016, the total means of payment increased by 14.92 percent and mobilisation increased by 15.28 percent compared to late 2015. The liquidity of the system of credit institutions (CIs) continued to be ensured and the interbank market operated smoothly.

The operating of interest rates is currently in line with the macroeconomic developments and the currency market. The stabilisation of the interest rate level is a positive result in the context when inflation is under a rising pressure, the demand for government bond issuance is large and credit continues to increase.

By the end of November 28th 2016, the lending grew by 14.57 percent compared to late 2015, in which lending in dong increased by 15.81 percent, and lending in foreign currency increased by 3.49 percent, consistent with the anti-dollarisation of the government.

SBV assessed that lending growth is currently reasonable, the credit structure is shifting towards positive direction, in which capital is focused on production and business sectors, especially the priority areas in order to support the restructuring of agriculture sector, development of fishery, small and medium enterprises, exporters, and high-tech businesses

Basically, the US dollar/dong exchange rate is stable in 2016. However, since the beginning of November, the volatility of international financial market has affected psychology and led to the rise of domestic exchange rate. According to SBV, the exchange rate developments on the domestic market in November 2016 are understandable because the agency has applied a more flexible exchange rate mechanism and allows the exchange rate to fluctuate daily in line with the movements of domestic and international markets. In the world, the US dollar as well as other currencies have also seen fluctuations.

However, the foreign currency supply and demand in the domestic in general have not encountered sudden changes. the liquidity has been good and CIs have timely and fully met the legitimate demand for foreign currency of organisations and individuals.

For 2017, SBV initially set out some key solutions in operating the monetary policy. In particular, SBV will continue flexibly operating the monetary policy with close coordination with fiscal policy and other macroeconomic policies in order to ensure the stability of macroeconomic balances, control inflation and support economic growth at reasonable level.

After acquiring a large amount of foreign currency in 2016, SBV will continue to flexibly operate the monetary policy tools to stabilise currency market, ensure liquidity of the system, effectively supply capital to the economy, support the stabilisation of exchange rate, create conditions to increase the national foreign exchange reserves in accordance with the actual conditions and control inflation based on target.

Moreover, the agency will to continue carry out the operating measures to strive to maintain the stability of interest rates as in 2016.

Although the credit growth target in 2017 has not been released, SBV said that the agency will build the oriented credit growth targets in 2017 and carry out measures to control credit in accordance with the oriented targets, in order to ensure safe and efficient lending growth and facilitate businesses in accessing loans. In addition, SBV will focus capital on priority areas under the policy of the government and control credit in a number of sectors which contains potential risks.

After deciding to extend the foreign currency lending to support enterprises in 2017, SBV said that the agency will continue to strictly control this type of lending in line with the policy to against dollarisation in the economy.

Lastly, SBV will closely monitor the domestic and international macroeconomic and monetary developments to actively carry out measures and use appropriate operating tools to stabilise the market.


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