Vietnam central bank raises policy rates by 100 bps

VIETNAM’S central bank announced on Thursday (Sep 22) that it would raise its policy rates by 100 basis points (bps), as the country fights to keep inflation under 4 per cent this year.

Effective Friday, the refinancing rate will be raised to 5.0 per cent and the discount rate to 3.5 per cent, the State Bank of Vietnam (SBV) said, in rare monetary policy tightening by the central bank.

It followed this week’s rate hike by the US Federal Reserve and the country’s prime minister urging the central bank to reconsider policy rates.

The dong fell for 9 consecutive sessions to 23,700 per US dollar, the lowest since at least 1993, Refinitiv Eikon data showed.

The daily reference rate set by SBV was recorded at 23,316 dong per US dollar on Thursday, the weakest since at least 2005, data showed.

SBV governor Nguyen Thi Hong said earlier on Thursday that Vietnam’s biggest economic challenge at present was to keep inflation under control.

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The bank on Thursday also said it would raise the caps on the interest rates of dong-denominated deposits from Friday, by 0.3-1.0 percentage points, depending on the maturities. REUTERS