False rumors strongly impact credit institutions: central bank

By Thai Ha
Sat, October 29, 2022 | 1:14 pm GMT+7

The currency and foreign exchange markets have experienced turbulence under the impact of untrue information, said State Bank of Vietnam Governor Nguyen Thi Hong.

This year has seen turbulence and more difficulties, Hong told the National Assembly session Friday. “Apart from high inflation globally, the instability of the domestic stock and corporate bond markets have exerted a strong impact on the monetary market.”

State Bank of Vietnam Governor Nguyen Thi Hong at the National Assembly session on October 28, 2022. Photo courtesy of the legislative body.

State Bank of Vietnam Governor Nguyen Thi Hong at the National Assembly session on October 28, 2022. Photo courtesy of the legislative body.

High inflation has spread all over the world, hitting double digits or higher in 80 countries. The U.S. Federal Reserve (Fed) and other central banks have raised interest rates faster than expected.

The Fed may further lift the benchmark rate to 4.5-4.7% by mid-2023. The strong appreciation of the U.S. dollar has caused many other currencies to depreciate. Such problems have caused difficulties for central banks worldwide.

“The State Bank has closely monitored and flexibly managed the exchange rate to stabilize the foreign exchange and currency markets. There was a surplus of bank liquidity in the first nine months of the year, while the interest rate only increased by 0.3-0.4% compared to the end of last year,” the governor noted.

However, Hong stressed that in October, the foreign exchange and currency markets have experienced turbulence due to the impacts of false information.

“The State Bank has been proactive, flexible and determined in ensuring the stability of the banking system, and ready to provide liquidity to meet credit institutions' payment needs,” she said.

Hong noted that the central bank has proactively allowed the exchange rate to fluctuate more flexibly. “Stabilizing the foreign exchange market is very important for foreign investors in Vietnam.”

The governor added that in the short term, there has to be a trade-off between goals. For instance, the central bank must accept that exchange rates and lending interest rates for corporate borrowers have increased in order to stabilize the foreign exchange market.

“The main goal is controlling inflation and stabilizing the macro-economy.”

The U.S. dollar has surged to record highs against the Vietnamese dong at Vietnamese commercial banks, while deposit interest rates have kept rising following the State Bank's deposit rate ceiling hikes.

On October 7-8, negative information about Saigon Commercial Bank (SCB) spread on social networks, leading to massive withdrawals of deposits before due dates at the Ho Chi Minh City-headquartered private bank.

Truong My Lan, chairwoman of HCMC-based property developer Van Thinh Phat Group, was arrested October 8 for alleged fraud in the issuance and trading of corporate bonds in 2018 and 2019.

In April, Do Anh Dung, chairman of property developer Tan Hoang Minh Group, was also detained by investigative police for alleged fraudulent appropriation of property via bond issuances.

In March, Trinh Van Quyet, chairman of FLC Group, one of Vietnam's leading real estate developers, was arrested on charges of “manipulating” and “concealing information in securities activities”. He is being investigated by the police for “manipulating the stock market” under the Penal Code.

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