SBV unveils 2017 policy

Accordingly, SBV said that it would pursue a proactive and flexible monetary policy next year to stabilise the rates of interest and foreign exchange.

The monetary policy will also be in close conjunction with fiscal and other macro-economic policies in a move to control inflation and support economic growth at a reasonable level.

After buying more than US$40 billion of foreign reserves to date this year - a record high in recent years, the SBV affirmed that it would continuously try to increase the country’s foreign reserves besides supporting efforts to stabilise the forex market in 2017.

Measures will be also taken to stabilise the monetary market and ensure the liquidity of the banking system, according to the central bank.

As for interest rate, the central bank is targeting a stable rate as in 2016.

Though the central bank has yet to release the credit growth target for 2017, it has revealed that it will take measures to control it to ensure the lending is safe and effective.

Lending next year will continuously focus on the Government’s five prioritised sectors of agriculture, exports, spare-parts industries, small- and medium-sized enterprises, and hi-tech firms, while limiting the capital to risky industries, the SBV stated.

As lending in foreign currencies will continue in 2017, as per a recently issued circular, SBV said that it would strictly control such kind of lending to ensure the country’s de-dollarisation policy.

Assessing the monetary policy management in 2016, the SBV said that in the context of pressure on high demands of Government bonds and lending as well as inflation in 2016, the managing of interest rates was positive and in accordance with macro-development of the past 11 months. Liquidity of the banking system was good while the operation of the inter-bank market was also smooth.

The SBV reported that rising money supply in the past 11 months didn’t put pressure on inflation. As of November 22, money supply rose 14.92% year-on-year while capital mobilisation surged 15.28%.

As of November 28, credit growth rose 14.57% as against December last year, of which lending in foreign currencies increased 3.49% – suitable with the Government’s de-dollarisation policy.

According to the SBV, the credit growth to date has been reasonable and positive with a focus on production and business, which has contributed to the restructuring of the agricultural sector as well as the development of fishery and spare-parts industries as well as small- and medium-sized firms, export and high-tech firms.

The central bank also said that the forex market in 2016 was basically stable, while adding that the sharp strengthening of the US dollar against the đồng last month was mainly due to market sentiment, which tracked global market developments. 

This change was normal, because the central bank had been regulating the exchange rate with a more flexible and market-based methodology this year, setting the reference rate every day and letting commercial banks trade the dollar at +/-3% on either side of the rate, the SBV said.

It affirmed that no sudden rise in the demand and supply for the dollar had been reported in the local forex market over the period. Liquidity in the banking system remains strong, helping banks meet dollar demand of institutions and individuals in a timely manner.