Vietnam dong devalued 1.1 percent in 2016

The State Bank of Vietnam (SBV) has reaffirmed its determination to pursue a proactive and flexible monetary policy in 2017.

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The aim is to achieve the goals of high economic growth and price stability in the context of volatile monetary policies of major countries, according to a statement made during an online conference between the government and local authorities at the end of December 2016.

The world economy is forecast to remain unpredictable next year, with a number of countries likely to exploit currency devaluations to support their trade.

SBV Governor Le Minh Hung suggested the government stick to its objectives of controlling inflation and stabilising the macro-economy to ensure sustainability for the whole economy.

However, the head of the monetary authority said macroeconomic policy management should limit the use of monetary policy instruments as a substitute for fiscal and budget measures.

“I also discussed this issue with the minister of finance to assign clear tasks in operation to ensure consistency in macroeconomic management,” Governor Hung said.

He said the domestic forex market and the exchange rate had been essentially stable this year, which was a good result compared with other volatile currencies that fluctuated under the pressure of the Brexit process and the US presidential election.

“By the end of 2016, the Vietnamese dong has devalued 1.1-1.2 percent and foreign currency liquidity is stable,” the governor said and attributed the currency stability to proactive policy management.

He said the central bank had reduced its intervention in the forex market this year and the demand for foreign currency had increased towards the year-end, but the forex market remained steadfast.

As for lending, he estimated credit expansion to reach 18.5 percent this year.

Admitting outlook for interest rates in 2017 will be under pressure due to high growth targets, the governor pledged to ensure stable basic interest rates and to strive to reduce lending rates for the medium and long-term as directed by the government.

Source: VNA

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