Vietnam central bank runs flexible monetary policy in 2022
The State Bank of Vietnam has managed monetary policy in a flexible manner to curb inflation and stabilize the monetary and foreign exchange markets in 2022, a year of global fluctuations.
Many countries worldwide have during 2022 tightened monetary policies to control heavy inflationary pressure amid global economic recession risks. The U.S. dollar has kept gaining due to the U.S. Federal Reserve’s interest rate hikes, and the U.S. Dollar Index hitting a two-decade high.

A Vietcombank transaction office in Vietnam. Photo courtesy of the bank.
In Vietnam, the central bank (SBV) has repeatedly sold a large amount of greenback to support the Vietnamese dong. However, the USD/VND forex rate started to soar in August, exceeding the level of VND25,000 in mid-October.
The SBV on October 17 decided to widen the VND/USD trading band to ±5% from ±3% to help banks more flexibly trade the greenback.
On September 23, the regulator raised its interest rates by one percentage point, putting its refinancing interest rate at 5% per annum, and rediscounting at 3.5% yearly. The move aimed to help the banking system mobilize more deposits. The SBV added an additional one percentage point to its interest rates on October 25, mainly to help improve the system’s liquidity.
Commercial banks in the country raised their deposit rates from mid-September to mid-December. Deposit rates for 12-13 months at many commercial banks were listed at 9.5-10.5% per annum at the time, and in some cases up to 11.5%. These high rates show poor liquidity in the system amid woes in the corporate bond market and a downtrend in the Vietnamese stock market.
Vietnam’s monetary market started to cool down in mid-December as the Vietnam Banks Association on December 15 called on its members to reduce their deposit rates, with the ceiling level being 9.5% per annum.
A week later, the SBV sent a dispatch to both Vietnamese and foreign banks in the country requesting them to continue cutting operating costs, administrative procedures, and unnecessary expenses in order to be able to keep cutting their lending rates. The regulator said it would keep an eye on interest rate hikes to take action.
As a result, many banks reduced their deposit rates to under 9.5% per annum and introduced lower lending rates to support corporate borrowers, with priorities given to manufacturers of essential products.
Speaking at a banking industry review in late-December, SBV Governor Nguyen Thi Hong said the industry has in 2022 solved three problems simultaneously.
The first is to provide capital and credit. Next is to stabilize the foreign exchange market amid the gaining greenback. The third, which is more important, is to stabilize the monetary market and the banking system’s liquidity, which was affected by the Saigon Commercial Bank crash in the fourth quarter and declining market confidence.
Vietnam’s 2022 consumer price index increased by 3.15% year-on-year, while average core inflation rose 2.59%, lower than the CPI increase, the General Statistics Office announced Thursday.
SBV Deputy Governor Dao Minh Tu said Tuesday that the central bank would continue to manage monetary policy in a flexible way to keep inflation at 4.5% in 2023 as the National Assembly has targeted.
“This aims to stabilize the monetary and foreign exchange markets to ensure the safety of the banking system,” he told a news conference in Hanoi.
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