Vietnam central bank readies measures to counter tariff impact
Risks in global markets are 'putting pressure on the management of monetary policy, exchange rates, and interest rates domestically, as well as on our efforts to achieve the 2025 economic growth target of 8 per cent or higher,' State Bank of Vietnam deputy governor Pham Thanh Ha said at a briefing in Hanoi on Tuesday (Jul 8).
The central bank will continue to manage the dong in a flexible manner and use monetary policy tools to keep the FX market stable, to help boost the economy and control inflation, Ha added.
After announcing a deal that will see a 20 per cent tariff on Vietnamese-produced goods and 40 per cent on those trans-shipped from elsewhere last week, US President Donald Trump stepped up his trade offensive on Monday, unveiling letters threatening higher tariffs on a range of key trading partners.
Vietnam said last week that negotiators are still working to finalise the details of the deal, providing little clarity to businesses and investors beyond the tariff rates disclosed so far.
The South-east Asian nation saw growth accelerate in the second quarter as foreign buyers raced to get ahead of the threatened tariffs boosted Vietnam's exports. Still, Prime Minister Pham Minh Chinh cautioned last week that the economy 'continues to face significant limitations, difficulties and challenges.' He said Vietnam must diversify markets and supply chains to adapt to the new US policy.
Vietnam's decision to keep 'interest rates at a low level to help businesses and boost growth has made the dong less attractive to hold' and has put pressure on the currency, according to Pham Chi Quang, head of the central bank's department for monetary policy, also speaking at the briefing.
The Vietnamese dong has been under pressure in recent weeks, dropping to a record low in June. Given the global slowdown, a weaker currency could help make Vietnamese goods more competitive as tariff pressure persists. BLOOMBERG
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