Information on monetary policy operations against the backdrop of domestic and external economic uncertainties in the first quarter of the year, said Mr. Dao Minh Tu, Deputy Governor of the State Bank of Vietnam, the State Bank will continue to implement monetary policy in a proactive and flexible manner, coordinating closely with fiscal policy and other macroeconomic policies to control inflation, support economic recovery, promptly adapt to domestic and foreign market developments, and maintain stability in the currency and foreign exchange markets.
NOTICES INVITING TENDERS FOR GOLD BIDDING TO 15 UNITS ON THE AFTERNOON OF APRIL 19
According to State Bank leaders, the Vietnamese economy is quite open but its resilience is still limited, so the impact of the global economy on Vietnam’s economy is inevitable. Besides, the difficulties in the country due to the pandemic, although basically resolved, have been compounded by potential difficulties and consequences that have been revealed in recent years.
“Credit growth was slow in the first quarter of the year, negative in the first two months of the year. This shows that the economy is still facing difficulties, so more drastic solutions are needed for credit to grow as expected,” Mr. Tu emphasized.
At the press conference, the Head of the Foreign Exchange Management Department informed that this afternoon (April 19), notices will be sent to 15 eligible credit institutions and enterprises to bid for gold, to be implemented on Monday of next week (April 22).
Regarding the hotness of the gold and foreign exchange market, the Deputy Governor of the State Bank said that there have been very sudden fluctuations, but they are within the expectations of the management agency as well as the assessments of analysts. Although, these fluctuations have had a great impact on the overall policy management of the Government and the State Bank.
“The global gold price has exceeded $2,400/ounce due to the impact of psychological factors, the war spreading, in particular the fear of escalating tensions in the Middle East and the pressure from oil prices,” Mr. Tu analyzed.
According to Mr. Tu, investors expect the US Federal Reserve (Fed) to cut interest rates soon in 2024, causing the US dollar index (DXY) to decrease, increasing demand for gold; central banks of some countries are increasing gold purchases. This is an impact on the world economy, not just Vietnam.
Regarding solutions, the State Bank leader said that it is implementing measures to support the gold market, selling gold bars to increase supply for the market through bidding. Along with that, the State Bank is currently urgently amending Decree 24 to manage the gold market in accordance with the general development of the economy after 12 years of implementation.
About the exchange rate, according to Deputy Governor of the State Bank Dao Minh Tu, the depreciation of VND against the beginning of the year by 4.9% is a significant concern. In terms of operations, the State Bank always closely monitors, uses tools and measures to manage the central exchange rate to rise and fall in accordance with the general situation, ensuring supply and demand and stabilizing the exchange rate, creating favorable conditions for import and export activities.
“The State Bank operates the exchange rate flexibly, ensuring stability for the economy but does not fix the exchange rate but uses measures to reduce shocks and reduce the impact on the domestic exchange rate, creating a balanced harmony. We are ready to intervene if the exchange rate fluctuates adversely. The foreign exchange reserve fund has ensured the role of management and the goal of stabilizing the exchange rate in the coming period”.
Mr. Dao Minh Tu, Deputy Governor of the State Bank.
Accordingly, the State Bank manages the exchange rate flexibly, helping to absorb shocks, combined with the issuance of VND credit notes to reduce excess VND liquidity, thereby reducing short-term pressure on the exchange rate.
Basically, market liquidity is smooth, all legitimate foreign currency demands are fully met; the exchange rate fluctuates in accordance with market conditions and the trend of international currencies against the USD. According to Mr. Tu, as the Fed is expected to delay rate cuts, positive employment data causes analysts to constantly adjust forecasts, geopolitical tensions are rising, affecting the rate cut roadmap. In more than 3 months, the USD has increased by 5%, which is huge compared to the corresponding foreign currency.
“The VND interest rate is negative compared to the USD in the interbank market, creating a psychology in commercial banks and the market which makes the exchange rate rise in part. The equation of exchange rate – interest rate is very difficult to operate harmoniously,” Mr. Tu explained.
The Deputy Governor of the State Bank added that many neighboring countries have had stronger fluctuations such as: the Taiwan dollar depreciated by 5.96%; Japan depreciated by 9.69%; the Korean won by 7.71%…
Comparing the two figures of USD increasing by 5% and VND depreciating by 4.9%, Mr. Tu said that the VND depreciation is still lower than the appreciation of the USD if calculated based on the scale of the economy.
The leader of the State Bank said that we should not hold on and wait for the exchange rate to rise. “In case of necessity, today (April 19), the State Bank will turn on the foreign exchange intervention mode if the exchange rate fluctuates negatively, but still let the exchange rate fluctuate in a state that is still consistent with the domestic and international economic situation, the situation of inflation control,” said Mr. Tu.
10 SOLUTIONS FOR UNCLOGGING CREDIT
Also at the press conference, the State Bank leader said that the Prime Minister and the Government have directed credit operations decisively, many conferences to remove difficulties to create conditions for economic growth. The State Bank has also implemented 10 solutions, with higher intensity and more actively.
Firstly, directing commercial banks to ensure sufficient liquidity for the economy, the credit needs of enterprises. Some commercial banks even have excess capital.
Secondly, reduce the operating interest rate in 2023 and instruct commercial banks to reduce lending interest rates.
The State Bank continues to keep the operating interest rates unchanged after 4 adjustments down in 2023 in the context of world interest rates still rising, creating conditions for credit institutions to access capital sources from the State Bank at low cost; continue to encourage credit institutions to reduce costs to reduce the lending interest rate level to support the economy. The deposit and new lending interest rates of commercial banks have decreased compared to the end of 2023.
Thirdly, the credit limit is set to be around 15%, which can be flexibly expanded in the final months of the year. Granting targets from the beginning of the year for banks to take the initiative.
Fourthly, manage the exchange rate and the foreign exchange market to ensure an amount of foreign currency that is reasonable to the legitimate foreign currency needs of enterprises and the economy.
Fifthly, complete the legal system, pass the Law on Credit Institutions and build a system of circulars and decrees, introduce new sanctions and new regulations from July 1 for synchronous implementation.
Sixthly, extend the loan repayment period and interest payment period, and remove difficulties for businesses. By June 31, this policy will end, but according to the proposed wishes of associations and enterprises, it will be extended to the end of 2024. The policy directly supports the current difficulties of enterprises, but needs to be calculated to ensure the balance of the quality of credit institutions and the safety of commercial banks.
Seventhly, vigorously implement preferential credit programs and packages, especially in the fields of seafood and forestry exports, which are very important, solving jobs and export goods. In which, the capital of 340 trillion VND of the Vietnam Bank for Social Policies and 25 social security programs of the Government have been implemented vigorously.
Eighthly, actively implement consumer lending, both creating mechanisms and conditions for financial companies and commercial banks to serve production, and implementing stimulus goals. At the same time, the State Bank cooperates with the Ministry of Public Security to exploit the national data center to consider unsecured loans for this type of credit.
Ninth, promote the reform of administrative procedures, procedures related to lending to people, improve the quality of commercial banking services with borrowers, popularize online disbursement, and shorten the bank transaction process.
Tenth,
