Among the countries in the region and worldwide grappling with currency depreciation, the Vietnamese dong is listed in a group with the smallest devaluation, Pham Chi Quang, deputy director of the Monetary Policy Department under the State Bank of Vietnam, told a press briefing late last week.

In the year to date, the dong dropped by nearly 4 percent against the U.S. dollar, much lower than other currencies, said Quang.

After the U.S. Federal Reserve (Fed) hiked interest rates by 75 basis points on September 21, many nations followed suit.

In the past nine months, the Taiwanese dollar, the Japanese yen, the Philippine peso and the euro have lost 13.5 percent, 25 percent, 13.65 percent and 13.49 percent, respectively, against the greenback.

“The Vietnamese dong is one of the currencies reporting the lowest depreciation in the region and the world, at some 4 percent,” Quang stressed.

After the Fed’s move, a number of the central banks of many nations such as Thailand, Norway and Indonesia raised key interest rates to tame inflation.

Dao Minh Tu, deputy governor of the State Bank of Vietnam, said that many countries’ rate hikes are expected to take a toll on Vietnam’s foreign exchange rates.

Following the Fed’s rate spike, the central bank decided to set new interest rate caps on deposits.

The highest rate for savings from one month to fewer than six months is 5 percent per year, up 1 percentage point, taking effect from September 23.

“The central bank will continue to control its currency in a flexible and appropriate manner to stabilize foreign exchange rates and ensure a reasonable and legal supply of foreign currencies for firms and residents,” Tu affirmed.

The central bank’s top mission for the control over monetary policy is curbing inflation and stabilizing the economy, Tu added.

Besides, the banking system will focus on supporting enterprises with their post-COVID-19 recovery, contributing to reaching the full-year target of the country’s economic growth at 6.5 percent set by the National Assembly.

To ease fears over a spike in lending rates after the deposit rate cap hikes, the central bank will continue to maintain interest rate stability, said the representative of the central bank.

Tu also added that lending rates will follow the move of domestic and foreign inflation in a suitable way.

Further, the central bank will continue to encourage credit institutions to cut operating costs to lower lending rates for the government’s priorities, including small and medium enterprises and firms active in agriculture.

“We called on commercial banks for a cost-cutting plan to slash lending rates to share difficulties with customers. This has been implemented well over the past two years, with VND25 trillion ($1.05 billion) in lending rate reduction,” said Tu.

The credit growth target will be kept at 14 percent this year. In the year to date, the nation’s credit has jumped by over 10 percent.

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