The Government leader chairs the regular August meeting – Photo: VGP/Nhat Bac |
Core inflation remains above 3%
At the regular August meeting held by the Government Office on September 6, SBV Vice Governor Doan Thai Son analyzed: Core inflation has remained above 3% in the past time. This is a worrying index, as typically, the 3% threshold is considered a warning sign for policy management.
The causes are both domestic and international. Externally, global inflationary pressures remain significant, with energy and raw material prices, along with unpredictable market fluctuations, driving up production and import costs. Domestically, rising housing rents and dining-out expenses, coupled with adjustments in gold prices and a series of State-managed commodities, have added to inflationary pressures.
“With this trend, the State Bank agrees with the Ministry of Finance on the necessity of close monitoring and flexible management. When new developments arise, we need to be proactive and anticipatory. If inflation continues to show signs of increase, management measures must be implemented beforehand to anticipate the trend; we cannot afford to be complacent and wait. Experience shows that if inflation surpasses a certain threshold, subsequent control solutions will come at a high cost. The State Bank will continue to closely monitor the situation and take timely measures within its authority and propose to the Government,” said Vice Governor Doan Thai Son.
SBV Vice Governor Doan Thai Son – Photo: VGP/Nhat Bac |
Exchange rate pressure expected to persist
Vice Governor Doan Thai Son informed that as of August 31, the average lending rate was 6.38%, down 0.56% compared to the end of 2024. However, the overall trend poses potential risks.
Credit outstanding as of the end of August reached VND 17,440 trillion, up 11.68% from the previous year. If calculated for a full year, credit growth would be around 20.19%, the highest in many years, whereas the usual rate is about 14.5%.
This leads to two consequences. Firstly, banks are compelled to increase capital mobilization, potentially driving up deposit rates and subsequently lending rates. Secondly, robust credit growth implies a larger money supply, exerting long-term inflationary pressure.
This year, especially in August, the exchange rate has faced considerable pressure. The high USD interest rates, coupled with low VND interest rates, have created a trend of capital conversion. Additionally, disbursement of foreign loans decreased, while repayment demands increased.
To address these challenges, the State Bank has flexibly managed the exchange rate in coordination with interest rate and liquidity tools and stands ready to sell foreign currencies when necessary. As of September 4, 2025, the exchange rate stood at VND 26,380/USD, down 0.09% compared to August 22 – when the SBV intervened through selling – but still up 3.45% compared to the end of 2024.
Moreover, given the objective reasons stemming from global developments, exchange rate pressures are expected to persist in the coming period.
Urgent completion of the new gold management mechanism
On behalf of the SBV, Vice Governor Doan Thai Son reported on the gold market management situation: In the past week, the global gold price surged, translating to an increase of over VND 3 million per tael in Vietnam. Simultaneously, media coverage and market expectations of gold price surpassing the $3,500/ounce mark heightened, fueling demand for gold hoarding.
The recent gold price hike resulted from three main factors. Firstly, the global gold price soared. Secondly, market expectations and sentiment anticipated further gold price increases, leading to a surge in gold purchases by the public. Additionally, as we are in the process of transitioning to a new gold management mechanism, the SBV temporarily halted the sale of SJC gold bars in the market, resulting in a scarce gold supply.
SBV data indicates that gold reserve demands from gold enterprises are not high, as gold, unlike other commodities, incurs substantial capital costs, making it impractical for inventory.
Regarding the gold market situation, following the Government’s directives, the SBV has concluded inspections of all major gold enterprises and commercial banks with significant gold business operations and is in the process of implementing the inspection conclusions.
In accordance with the Prime Minister’s instructions, the SBV will enhance inspections and examinations, in collaboration with relevant ministries and sectors, to address any violations.
“Most importantly, we must urgently implement solutions to manage the gold market according to the new mechanism approved by the Government,” emphasized Vice Governor Doan Thai Son.
Anh Minh
– 16:11 09/06/2025
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