In order to curb overheating, confrontation growing inflation, after 10 months, Viet Nam 25, announced that the interest rate, will restart the benchmark interest rate by one percentage point. This is also the first Asian economies of increasing interest.
Analysts noted that compared to other economies around the Viet Nam economic situation some special, it does not necessarily mean the short term there are many other central banks will start adding interest. As the trade deficit continues to expand, Viet Nam was facing pressure from local currency devaluation, the Central Bank also announced a one-time devaluation yesterday in the local currency.
However, the interest rate but also on other Viet Nam economies has sounded the alarm, in liquidity flooding background, makers need highly concerned about asset bubbles and potential inflation risks.
Does not have a representation
According to Viet Nam's Central Bank, 25 April, the row will have from December onwards from 7.0% benchmark interest rate to 8.0%, this is the row since January increases interest rate for the first time, it is Asia's first start the interest rate of the economy.
Since January of this year, Viet Nam has been the benchmark interest rate at 7%, to help the Government complete economic growth target of 5%. Viet Nam economic growth last year, the 6.2% 9 years minimum. However, over the past few quarters, the Government's stimulus plan-driven and Viet Nam sustained economic upturn. Quarter, Viet Nam has 5.8% economic growth, the previous two quarters respectively 3.1 4.5 percent.
Notice that the Central Bank of Viet Nam is working to sustain economic growth next year, and curb inflation. The interest rate in order to strictly control the loans and support economic goals.
At the same time, Viet Nam has announced that starting from 26, will be the US dollar exchange rate of the Viet Nam shield by 5.44%. In addition, the Central Bank also will put a shield of the US dollar against the Viet Nam's volatility interval allowed from the current 5% narrowed to 3%.
Standard Chartered Bank in South Asia economic research supervisor too-that situation in Viet Nam and other Asian economies are completely different, the interest rate is Viet Nam shield to provide more support, and the devaluation of the shield is designed to help exporters. "Most Asian economies are boycotting the local currency appreciation, talk of capital controls. "He said," but at the moment of Viet Nam economic Asia alternative. ”
And many Asian economies, Viet Nam has a large trade deficit, and has continued to expand, the month of October, Viet Nam's deficit expanded to 19 million, a 17-month highs. Expand the deficit makes Viet Nam shields depreciation pressure continued to increase and thus also consume a large amount of foreign exchange reserves to the Government to maintain a stable exchange rate.
Societe Generale Bank in France strategist bainat said, apparently in an attempt to Viet Nam's Central Bank to market, reduce the pressure of the depreciation of the Viet Nam shield, such practices are appropriate and informed. This is also a Bank of Viet Nam for the third time in two years the devaluation of local currency.
Warning to the effect that should not be overlooked
Viet Nam took interest daring, highlights the country's inflation worries. Viet Nam has been a senior government official said recently, economic inflation rise risk exists, because the economy into a lot of money.
In November, Viet Nam's inflation rate reached half a year to the highest levels, an increase of $ 4.35%, largely influenced by the rapid expansion of credit, the rapid economic growth, as well as factors such as rising oil prices. Official estimates, by the end of the inflation rate will rise to 6%. Top ten months of this year, Viet Nam's credit growth rate as high as 33%, exceeding the Government's annual growth targets set.
CapitalEconomics company economists Goliath, said this week that Viet Nam may be Asian central banks in the monetary tightening in the most radical one. He had expected the country will rise in January next year, while the actual situation than expected earlier.
Goliath that Viet Nam challenges faced one of the most important is to ensure that the economy does not overheat. He is expected in the fourth quarter of this year, GDP growth in Viet Nam is 7%. Goliath is expected, in order to prevent overheating, Viet Nam's central bank interest rate will be the end of next year to 12%.
HSBC Holdings expects that Viet Nam's inflation rate to the second quarter of next year may reach at least 10%. It pointed out that, as the international market, food and rising oil prices, rising domestic demand, Viet Nam will face increasing inflationary pressure.
Despite the country's situation is unique, but analysts have cautioned that similar initiatives but also to other Asian economies had a wake, asset price bubbles and have the potential risk of inflation.
Affected by interest rate factors, 25, Viet Nam plummeting 4.5%, a seven months of decline, the largest one-day admission to 503 for the three-month low point. Prior to this, the local stock market in late October, early peaked up nearly 100%.
By contrast, the other Asian economies still select interest rates remain unchanged, because the fear that this would undermine the economic recovery; in addition, the interest rate can also stimulate the increase of hot money surged into the local currency, thereby pushing high and increasing financial volatility.
The interest rate or the last selected
However, the current emerging markets especially asset bubbles in the Asian region has caused concern of all parties. Many economists and international institutions for a warning, and urges States to take appropriate measures.
World Bank President Zoellick yesterday in the Financial Times article noted that the G20 members should address the risk of the asset bubble develop countermeasures. Zoellick said the economy taken by the expansionist policies may result in the formation of risk of the asset bubble, which may be larger than the traditional sense of inflation even more destructive, because it indicates that the point of view would be a very healthy development: higher asset prices will boost the real economy, in turn, will put the foam blowing.
However Zoellick also cautioned that short period of substantial increases in interest rates may not be the best choice for foam, particularly where recovery was still weak places, which could lead to the second on the bottom.
On Asian economies, the interest rate may be greater for local currency appreciation pressure to combat export. Therefore, it now seems that most Asian economies are not inclined to soon start adding interest
At least not be significantly older than the United States, the latter estimate likely to in the third quarter of next year before considering the interest rate.The Asian Development Bank CEO Haruhiko this week, compared to other regions of the world, Asia appears to be a more rapid pace of economic recovery is still not enough, in fact enough to withstand the tightening of monetary policy could have impact. He suggested that the Asian monetary policy in a period should continue to maintain a relaxed.
Zoellick proposed, in the interest rate increases, to deal with asset bubbles can take other choices, such as Singapore take increases land supply and strengthening the mortgage regulation, set for bank credit growth target, control credit flows to real estate and the total amount of the capital market, and requires banks to raise capital, and so on.
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