Goldman Sachs Hails Vietnam in Interest Rate Hike
The U.S investment bank Goldman Sachs has issued a report to hail the State Bank of Vietnam’s decision on raising the basic interest rate to 14 per cent from 12 per cent June 11 and devaluing Vietnam dong by 2 per cent.
The move goes in right track to lower credit growth and curb inflation pressures, Goldman Sachs said.
The hiked interest rate is a more effective anti-inflation measure than other administrative measures such as credit control or increase of compulsory reserve rate, because it causes less negative impacts and longer effectiveness for the economy, the report said.
This is the second hike of base interest rate over the past four weeks, which reflects the Vietnamese government’s efforts in fighting inflation as number one target, rather than attaining high economic growth.
The devaluation and rate hikes “should help Vietnam avoid being forced into a more disruptive crisis with a significant one-off devaluation in currency value,” Goldman Sachs said.
This is an urgent reaction of Vietnam policy makers ahead the increasing monetary uncertainties.
Goldman Sachs predicted that there will be exchange rate adjustments in coming time due to high inflation remained.
The Vietnam government should continue to tight money supply to restrain credit growth and cut public spending as well closely supervise investments and expenditures of the state-owned companies. (Vietnam Economic Times, Banking Times)
Vietnamese
