USD/VND exchange rate basically fluctuates flexibly and appropriately. Photo:collection

SBV Governor Nguyen Thi Hong has just sent a report to the National Assembly delegates regarding a number of issues raised at the 8th Session of the 15th National Assembly.

Accordingly, regarding interest rate management, in the first ten months of 2024, the SBV will maintain the operating interest rate, after continuously adjusting the interest rates down four times with a reduction of 0.5-2.0%/year in 2023.

This is to create conditions for credit institutions (CIs) to access capital from the SBV at low costs to contribute to supporting the economy and directing CIs to reduce operating costs to reduce lending interest rates.

Regarding exchange rates, according to the SBV, in general, from 2022 to October 2024, although the world financial market has many fluctuations, the USD/VND exchange rate will basically move flexibly, in accordance with market conditions, the foreign exchange market will remain stable, and market liquidity will be smooth.

In some periods, the currencies of many countries in the region fluctuated strongly due to pressures on the world financial market, but the depreciation of VND against USD was appropriate and relatively stable compared to the general trend of currencies.

Regarding credit, the SBV said that as of October 31, 2024, credit increased by 10.08% compared to the end of 2023, up 16.65% compared to the same period in 2023.

The average lending interest rate in 2023 decreased by more than 2.5%/year compared to the end of 2022; by October 20, 2024, it continued to decrease by 0.76%/year compared to the end of 2023.

The SBV's report pointed out many difficulties, challenges and pressures in managing monetary policy in the coming time.

Firstly, the inflation reduction is not sustainable and has the potential risk of increasing pressure in the context of the large openness of Vietnam's economy, complicated fluctuations in world commodity prices due to the impact of complicated geopolitical developments, the increasing trend of food security in countries, extreme weather...

Second, it is very difficult to implement the policy of continuing to reduce interest rates in the coming time.

The reason is that lending interest rates have tended to decrease sharply in the past time (in 2023, they decreased by more than 2.5%/year and by October 20, 2024, they continued to decrease by 0.76%/year compared to the end of 2023).

Moreover, the demand for credit capital is continuing to increase, which will put pressure on interest rates in the coming time.

Exchange rate pressure from the international market makes the reduction of domestic VND interest rates even more pressure on the exchange rate and the domestic foreign exchange market.

Third, the pressure on capital supply from the system of credit institutions for the economy is large, including medium and long-term capital in the context of capital mobilization from the corporate bond and securities markets facing many difficulties.

According to the State Bank, this poses a great risk of maturity and liquidity for the banking system (short-term mobilization for medium and long-term lending).

Fourth, the credit absorption capacity of enterprises and people is low when many enterprises have reduced or stopped production due to lack of orders, financial health has declined; the trend of tightening and cutting spending; legal procedure problems...

Therefore, the SBV said that in the coming time, it will continue to closely follow market developments, the domestic and foreign economic situation to manage monetary policy promptly and effectively.

At the same time, it will coordinate synchronously, harmoniously and closely with fiscal policy and other macroeconomic policies to contribute to supporting economic growth, stabilizing the macro economy, controlling inflation...