Vietnam’s Central Bank Proposes Set Annual Interest Rates

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Dec. 31 – Vietnam’s central bank is proposing to the government that the country set interest rates annually and allow companies to negotiate the price they pay for the country’s currency independently with banks, according to reports by Tuoi Tre, a local newspaper.

The State Bank of Vietnam submitted the plan, which allows policymakers to communicate key government stances on interest rates and currency values to Prime Minister Nguyen Tan Dung.

Under the plan, the central bank would announce its year-long interest-rate policy and only adjust it if there is an unexpected change in economic conditions.

The plan attempts to tackle the problem developing economies often face when controlling the value of their currency; inflation often sets in domestically if the currency is devalued to encourage exports.

Vietnam sets a reference rate for the dong, which can be different from the exchange rate used by small gold shops and various money exchangers.