Challenges for Vietnam's monetary policy in 2026

Vietnam’s ambition to achieve economic growth of over 10% in 2026 is expected to put increasing strain on monetary policy, as authorities juggle the often competing objectives of system liquidity, interest rates, exchange rates, and inflation control.

At the government’s regular press briefing on Saturday, State Bank of Vietnam (SBV) Deputy Governor Pham Thanh Ha highlighted several notable indicators.

Credit growth has been "relatively strong" compared with previous years. In the year to November 27, outstanding credit in the economy exceeded 18.2 quadrillion dong ($690.4 billion), up 16.56% from the end of 2024, compared with an 11.47% increase a year earlier and a 15.09% rise recorded at the end of 2024 from end-2023.

The SBV’s management of monetary policy has helped keep inflation under control and aligned with targets set by the National Assembly - the country's legislature - and the government.

Average inflation in the first 11 months of 2025 stood at 3.29%, well below the 4.5-5% target, while core inflation was 3.21%. Economic growth remained solid, with GDP expanding 7.85% in the first nine months of 2025, helping maintain macroeconomic stability.

However, the SBV deputy governor acknowledged that monetary policy management in 2026 will face significant challenges, particularly as the policy outlook of major central banks - especially the U.S. Federal Reserve - remains difficult to predict, complicating interest rate and exchange rate management.

Vietnam's central bank will continue to deploy monetary tools proactively and flexibly, while coordinating closely with fiscal and other macroeconomic policies to support liquidity in the banking system through multiple channels and stabilize money and foreign exchange markets, he added.

Economist Nguyen Tri Hieu told The Investor that Vietnam could achieve GDP growth of 8.3-8.5% this year, with credit growth reaching as high as 18%. Still, he cautioned that it would be extremely difficult to simultaneously achieve three goals: low inflation, a stable exchange rate, and financial system safety, especially if GDP growth targets rise above 10% next year.

“Pushing economic growth too fast could come at a cost in terms of resource depletion, labor quality, environmental pressure, and macroeconomic stability,” Hieu said, adding that global uncertainty, including unpredictable trade, tariff, and geopolitical policies under U.S. President Donald Trump, would further challenge emerging markets such as Vietnam.

From recent money market developments, economist Le Xuan Nghia, member of the Prime Minister's Policy Advisory Council, noted that overnight interbank rates temporarily rising to 7% signal mounting liquidity pressure.

"When credit demand outpaces deposit growth, banks are forced to borrow from one another, pushing up interbank rates. To keep rates low, the SBV would need to inject liquidity, for example by purchasing government bonds from commercial banks, which would expand the monetary base," he noted.

Nghia stressed that a GDP growth target above 10% would sharply lift credit demand, but policymakers should not focus solely on credit growth. Instead, they must closely monitor growth in the money supply (M2), which includes the monetary base issued by the central bank, along with household and corporate deposits.

High economic growth does not necessarily require credit expansion at all costs, he argued. While the SBV could significantly increase base money to support growth, such measures would place additional pressure on inflation, forcing the central bank to balance liquidity, interest rates, exchange rates, and inflation objectives with great caution.

Typically, the SBV would only consider large-scale liquidity injections via open market operations (OMO) or government bond purchases when liquidity becomes severely strained and threatens economic growth, Nghia added.

On property lending, Nghia said real estate credit growth of about 19% in the year to late September was not a concern, noting that property lending usually grows faster than overall credit because of the sector’s size and capital-intensive nature. In many countries, housing-related loans account for 40-50% of total outstanding credit.

In Vietnam, property demand for capital is expected to continue rising as a number of stalled projects have recently been unlocked following legal reforms approved by the National Assembly and the government, he said.

On the exchange rate, Nghia said any depreciation of the Vietnamese dong would likely remain limited as long as the U.S. dollar index stays around 98, with notable pressure only emerging if the index rises above 100.

Explaining the recent surge in U.S. dollar prices on the informal market, Nghia attributed it mainly to strong year-end import demand at a time when many businesses remain under financial strain, alongside some banks offering products that allow borrowers to deposit U.S. dollars to profit from interest rate spreads between the dollar and the dong - boosting foreign currency demand.

Looking ahead to 2026, economist Nguyen Tri Hieu forecast that the dong could depreciate by around 4-5% against the U.S. dollar over the year, as foreign currency demand rises on the back of stronger credit growth and the possible need to import gold.

On November 10, Singaporean bank UOB said it maintains a cautious outlook on the Vietnamese dong (VND) and revise its USD/VND forecasts to 26,400 in Q4/2025, 26,300 in Q1/2026, 26,200 in Q2/2026 and 26,100 in Q3/2026.

"We continued to be negative on the VND, which stayed close to its record low of 26,436/USD reached in August, as the State Bank of Vietnam (SBV) continued to guide the currency weaker through its daily fixings," wrote UOB in a release.