Vietnam central bank says global risks complicate policymaking

[HANOI] Global risks are putting pressure on the Vietnamese central bank’s policy management, deputy governor Pham Thanh Ha said on Thursday (Jul 2).

The South-east Asian manufacturing hub is targeting economic growth of more than 10 per cent this year, supported by stronger infrastructure spending, but the impact of the Iran war could derail its ambitious plans.

“Geopolitical tensions and trade frictions have continued, while the escalation of the conflict in the Middle East in particular has placed significant pressure on international commodity and financial markets,” he told a press conference in Hanoi.

He said that the dong currency has been put under pressure by the strengthening US dollar, and the central bank was working to stabilise the foreign-exchange market.

Ha noted that the central bank has been able to manage the foreign-exchange market in a flexible manner, adding that demand for foreign currencies in the Vietnamese economy has been fully met.

Pham Chi Quang, head of the central bank’s monetary policy department, told the same conference that Vietnam is facing mounting inflationary pressure due to its exposure to the global economy.

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Quang said that the central bank will make inflation control a priority during the rest of the year to ensure macroeconomic stability, while also trying to achieve the government’s economic growth target of more than 10 per cent.

Vietnam’s annual inflation rate came in at 5.6 per cent in May, higher than the country’s target of 4.5 per cent for the entire year. REUTERS