4 years ago, inflation rose to over 23%, pushing loan interest rates to over 25%. High interest rates had catastrophic effect on businesses, with many going bankrupt.
But now, inflation has been brought to a 10-year low of 5% . Along with that, the foreign exchange market and the gold market have proved more stable. Lending rates have fallen to around 6-9% a year.
More people are selling gold and dollars to make deposits in VND.
The macro-economy has been stabilised. The VND have remained relatively strong. Therefore, we’re depositing money in banks. Low inflation rates makes saving a good way to maintain the value of the money.
For enterprises, thanks to the new interest rates, they can afford to repay loans because of their cheaper lending rates.Foreign investors also have a positive outlook for Vietnam’s macro-economy.
Successfully lowering the inflation rate is considered the key success of Vietnam’s macroeconomic policies. Failure to lower the inflation rate can cause the bankruptcy of many banks and consumers will lose trust in the economic system. Vietnam’s credit rating has also improved, especially in the context when we need to borrow more from international funds.
The efficiency of the monetary policy has enhanced Vietnam’s credit rating. Fitch increased Vietnam’s rating to BB-. Moody’s ranked Vietnam at B1, closer to the threshold for investment recommendations.
