State Bank's operations under pressure of interest rates, exchange rates, and gold prices

(Chinhphu.vn) - Core inflation maintained above 3% for many months, high credit growth, fluctuating exchange rates and gold prices, posing great pressure, requiring flexible management and proactive response.

Government leaders preside over the regular Government meeting in August - Photo: VGP/Nhat Bac

Core inflation remains above 3%.

At the regular August Government meeting organized by the Government Office on September 6th, Deputy Governor of the State Bank of Vietnam, Doan Thai Son, analyzed: Core inflation has remained above 3% recently. This is a worrying indicator, as normally, the 3% threshold is considered a warning sign in policy management.

The causes stem from both domestic and international factors. Externally, global inflationary pressure remains very high, with rising energy and raw material prices, along with unpredictable fluctuations in the world market, causing production and import costs to increase sharply. Domestically, rapidly increasing rents and dining out expenses, coupled with adjustments to gold prices and a range of state-controlled goods, have further exacerbated inflation.

"With this trend, the State Bank of Vietnam agrees with the Ministry of Finance on the need for close monitoring and very flexible management. When new developments occur, we need to be proactive and anticipate them. If inflation continues to show signs of increasing, immediate measures are needed to anticipate the trend; we cannot be complacent and wait. Experience shows that if inflation has exceeded a certain threshold, subsequent control measures will come at a very high price. The State Bank of Vietnam will continue to closely monitor the situation to take timely measures within its authority and propose them to the Government," Deputy Governor Doan Thai Son said.

Deputy Governor of the State Bank of Vietnam, Doan Thai Son - Photo: VGP/Nhat Bac

Exchange rate pressure is expected to remain significant.

Deputy Governor Doan Thai Son reported that as of August 31st, the average lending interest rate was 6.38%, a decrease of 0.56% compared to the end of 2024. However, the overall trend still carries potential risks.

Outstanding credit at the end of August reached VND 17.14 million billion, an increase of 11.08% compared to the end of the previous year. If calculated for the whole year, credit increased by approximately 20.19%, the highest level in many years, while the usual rate is only around 14.5%.

This leads to two consequences. First, banks are forced to increase their deposit mobilization, potentially driving up deposit interest rates, which in turn will lead to higher lending rates. Second, strong credit growth means a larger money supply, putting inflationary pressure on the market in the long term.

This year, particularly in August, the exchange rate has been under significant pressure. USD interest rates have remained high while Vietnamese Dong interest rates have been low, creating a trend of capital flight. Furthermore, foreign loan disbursements have decreased, but the demand for debt repayment has increased.

In response, the State Bank of Vietnam flexibly managed the exchange rate, coordinating with interest rate and liquidity tools, and was ready to sell foreign currency when necessary. As of September 4, 2025, the exchange rate was trading at 26,380 VND/USD, down 0.09% compared to August 22 – the date of intervention sales – but still up 3.45% compared to the end of 2024.

Furthermore, given objective factors stemming from the global situation, exchange rate pressure is expected to remain significant in the coming period.

Urgently finalize the new operating mechanism with 'gold'.

Reporting on the gold market management situation on behalf of the State Bank of Vietnam, Deputy Governor Doan Thai Son said: In the past week or so, world gold prices have surged, increasing by more than 3 million dong per tael when converted to Vietnamese currency. At the same time, media coverage of rising gold prices has created widespread expectations that gold prices will break the 3,500 USD/ounce mark, leading to a sharp increase in demand for gold as a store of value.

The recent surge in gold prices was due to three main factors. Firstly, the world gold price rose very sharply. Secondly, market expectations and sentiment that gold prices would continue to rise led to a significant increase in demand. Meanwhile, another factor was the supply situation in Vietnam. Due to the ongoing transition to a new gold management mechanism, the State Bank of Vietnam temporarily halted the sale of SJC gold to the market. This resulted in a significant shortage of gold supply. Those are the three main factors.

Data from the State Bank of Vietnam shows that the demand for gold reserves from gold businesses is not high, because unlike other commodities, gold cannot be stored due to the very high capital costs.

Regarding the gold market situation, following the government's directive, the State Bank of Vietnam has recently concluded an inspection of all major gold trading enterprises as well as commercial banks with significant gold trading operations and is currently implementing the inspection findings.

Following the Prime Minister's directive, the State Bank of Vietnam will strengthen inspection and investigation efforts to clarify this matter, in coordination with relevant ministries and agencies, and to handle any violations if found.

"Most importantly, we must urgently implement solutions to manage the gold market according to the new mechanism approved by the Government," Deputy Governor Doan Thai Son emphasized.

Mr. Minh

Source: https://baochinhphu.vn/cong-tac-dieu-hanh-cua-ngan-hang-nha-nuoc-truc-ap-luc-lai-suat-ty-gia-gia-vang-102250906161602219.htm