VietFinanceNews.com - Although inflation eased in the last months of 2011, it is still too early to loosen monetary policy immediately, ANZ said, emphasizing that interest rates should be kept unchanged until the end of the Tet holiday.
The State Bank of Vietnam (SBV) should only gradually loosen monetary policies in 2012, ANZ suggested, saying that the main objective is to control inflation below 10% and achieve GDP growth rate of 6 to 6.5%. Experts noted that market interest rates in Q4/2011 were relatively stable thanks to improved liquidity of local banks and support of the SBV.
According to ANZ, thanks to easing inflation and improvement of the country’s balance of payment (BoP), the dollar exchange rates were somewhat stable in Q2 and Q3/2011. However, such improvement is unsustainable as inflation still stays very high and current account deficit is huge. In the coming time, the domestic currency will continue to face depreciation pressure.
In a press meeting on Jan 11, the SBV’s Governor Nguyen Van Binh, said that local foreign exchange market in 2012 would become more stable, projecting that the domestic currency, the dong, could lose by a maximum 3% of its value against the dollar.
Credit growth of the whole banking sector was estimated to stay at 12-13%, much lower than the revised target of 15-16% and also the lowest level in the history of the banking system. In 2012, the SBV set out money supply (M2) growth target at 14-16% and credit growth rate at 17-20% along with a goal of curbing inflation below 10%.
Medium and long-term government bond yields in the fourth quarter of last year were steady at 12.5% p.a. while yields on one-year bonds rose to 12.8% p.a. in December from 12.3% in the third quarter of 2011, ANZ said.
