State Bank of Vietnam adjusts monetary policies

Circular No. 6 tightens the credit risk ratio for real estate activities. This circular is considered support for domestic banks, as many are currently restructuring and resolving bad debts.

Nguyen Hung, General director, Tien Phong bank said: With many circulars issued in the past, many banks failed to meet the new requirements. Therefore, Circular no. 6 will have a good impact on banks, because it will allow them more time to adjust their credit systems.

Circular No. 7 allows enterprises to borrow in foreign currency with an interest rate at 15% of financial cost.

"Thanks to Circular No. 7, we can borrow in USD with interest rates lower than if we borrow in VND. It helps us reduce production costs and increase our competitiveness", Nguyen Huu Khoi, Director, Toan Phat Bronze Company added.

However, these two circulars are open for adjustment, as the State bank of Vietnam is still measuring their impact on the market. The State bank is also raising the ratio of government bond purchases from 15% to 25%, which will help stabilise the financial system.

Dr. Pham The Anh, Economic expert said: The newly issued circulars are meant to help with monetary policy, especially the focus on purchasing government bonds. It shows that the State Bank of Vietnam is channeling the flow of money in the government bond sector, not the private sector.

If the State bank of Vietnam does not focus on buying government bonds, more money could be available to the private sector for lending. In that case, the interest rate for borrowing will decrease and enterprises will find loans more accessible.