HANOI (Reuters) – Vietnam’s central bank announced on Thursday it would raise its policy rates by 100 basis points, as the country fights to keep inflation under 4% this year.
Effective Friday, the refinancing rate will be raised to 5.0% and the discount rate to 3.5%, the State Bank of Vietnam (SBV) said, in rare monetary policy tightening by the central bank.
It followed this week’s rate hike by the U.S. Federal Reserve and the country’s prime minister urging the central bank to reconsider policy rates.
The dong currency fell for nine consecutive sessions to 23,700 per dollar, the lowest since at least 1993, according to Refinitiv Eikon data.
The daily reference rate set by SBV was recorded at 23,316 dong per dollar on Thursday, the weakest since at least 2005, data show.
The SBV Governor Nguyen Thi Hong said earlier on Thursday that Vietnam’s biggest economic challenge at present was to keep inflation under control.
The bank on Thursday also said it would raise the caps on the interest rates of dong-denominated deposits from Friday, by 0.3-1.0 percentage points, depending on the maturities.
(Reporting by Phuong Nguyen; Editing by Kanupriya Kapoor, Martin Petty)
