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Vietnam central bank chief says it can provide liquidity to the banking system

Vietnam central bank chief says it can provide liquidity to the banking system

Monday, November 07, 2022, 09:59 GMT+7
Vietnam central bank chief says it can provide liquidity to the banking system
The State Bank of Vietnam building is seen in Hanoi, Vietnam, October 8, 2022. Photo: Bao Anh / Tuoi Tre News

HANOI -- Vietnam's central bank is willing to provide liquidity to the local banking system, Governor Nguyen Thi Hong said on Sunday, as lenders face pressure from higher interest rates and tightening credit conditions.

Hong confirmed that the central bank had held emergency meetings during the week with commercial banks to discuss liquidity in the system, which Reuters reported on Friday.

"The State Bank of Vietnam is ready to provide liquidity to help credit institutions to maintain their payment capability," Hong told national broadcaster VTV, while adding that the situation is now moving in a "positive direction".

The central bank has this year raised its policy rates by a combined 200 basis points and allowed the dong to weaken, with the currency down 6% against the U.S. dollar in the last three months. The stock market .VNI has fallen by more than 20% over the past three months.

A widening anti-corruption initiative has meanwhile hit the property sector, ensnaring prominent business people, brokers, and developers and freezing the debt market that has fuelled the sector's expansion.

Hong said things had improved and urged local banks to assess the situation prudently.

"The market is now evolving in a positive way, and market sentiment is calm now," she said. "Vietnam's economic fundamentals remain positive."

The government has taken measures to boost public investment, exports and foreign investment inflows, which Hong said were helping to ease pressure on the foreign exchange market and on banking system liquidity.

Vietnam's gross domestic product is expected to grow 8% this year, faster than last year's expansion of 2.58%. Inflation is targeted at 4% in 2022.

Prime Minister Pham Minh Chinh told parliament on Saturday that Vietnam would stick to its target to keep inflation under control and ensure macroeconomic stability.

Reuters

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