Currency market, exchange rate in January is basically stable, interest rate level maintains downward trend

According to the report of the Ministry of Planning and Investment , the socio-economic situation in January 2024 continued to recover positively with many important and noteworthy results in all fields. The macro economy continued to be stable, inflation was controlled, and major balances were ensured.

Minister of Planning and Investment Nguyen Chi Dung reports at the regular Government meeting in January 2024

The consumer price index (CPI) in January 2024 increased by 3.37% year-on-year (mainly due to the impact of the planned increase in prices of medical services and retail electricity). Core inflation in January increased by 2.72% year-on-year, lower than the average CPI increase, mainly due to the prices of medical services andeducation services, which were factors affecting the increase in CPI last month but were excluded from the list of core inflation.

The monetary market and exchange rate are basically stable; the deposit and lending interest rates maintain a downward trend. Accordingly, monetary policy continues to be managed proactively, flexibly, promptly and effectively; coordinated synchronously, harmoniously and closely with fiscal policy and other macroeconomic policies, contributing to supporting economic growth, stabilizing the macro economy, controlling the target inflation in 2024 at an average of about 4-4.5%, stabilizing the monetary and foreign exchange markets and the banking system.

In particular, operating open market operations flexibly to support liquidity for credit institutions, contributing to stabilizing the monetary market and implementing monetary policy objectives. On the basis of closely monitoring developments in the monetary and foreign exchange markets, continuing to maintain term purchase offers of valuable papers in daily open market operations to signal readiness to support capital for credit institutions, stabilizing the monetary market; the interest rate for purchasing valuable papers decreases in sync with other operating interest rates of the State Bank. Systemic liquidity is abundant, the monetary market is stable, operating smoothly, interbank interest rates remain low.

Credit management in harmony with macroeconomic developments to contribute to supporting economic growth, controlling inflation, stabilizing the macro economy, and ensuring the safe operations of credit institutions. Managing credit growth of the entire credit institution system in 2024 at about 15%, with appropriate adjustments to actual developments and situations; researching and innovating credit growth management.

Specifically, to facilitate credit institutions to provide credit capital for the economy, from the beginning of 2024, the SBV has assigned the entire credit growth target of 15% and announced the principles for assigning credit growth in 2024 so that credit institutions can proactively implement credit growth. In the coming time, the SBV will continue to closely monitor developments and actual situations to proactively manage credit growth to contribute to controlling inflation, stabilizing the macro economy, supporting economic growth and ensuring system safety.

Regarding interest rate management, continue to maintain the operating interest rate after 4 reductions; synchronously implement many measures to strive to reduce lending interest rates; continue to direct credit institutions to reduce costs to reduce lending interest rates to support businesses and people to recover and develop production and business; request credit institutions to implement measures to reduce interest rates, especially reducing lending interest rates for loans with outstanding balances and new loans.

Regarding exchange rate management, since the beginning of the year, the exchange rate has tended to increase in the context of customers having a relatively large demand for foreign currency to import for production and business (steel, gasoline). However, the balance of foreign currency supply and demand has remained relatively stable, market liquidity is smooth, legal foreign currency needs are fully met; exchange rates have moved in line with the trend of international currencies compared to the USD. The State Bank continues to closely monitor the market situation to flexibly and appropriately manage exchange rates, and is ready to intervene in the market when necessary to stabilize the foreign currency market, contributing to controlling inflation and stabilizing the macro economy.

At the same time, resolutely and effectively implement the Project on Restructuring the System of Credit Institutions in conjunction with handling bad debts in the period of 2021-2025, contributing to the development of a system of credit institutions operating healthily, with quality, efficiency, openness, transparency in accordance with the provisions of law and approaching and meeting international standards and practices. Focus on effectively implementing the plan to handle weak credit institutions, and restructuring specially controlled commercial banks under the direction of competent authorities.

Direct credit institutions to step up the work of handling and recovering bad debts; improve credit quality, prevent and limit the emergence of new bad debts. By the end of November 2023, the on-balance sheet bad debt ratio was 4.95%. In the 11 months of 2023, the entire system handled about VND 214.4 trillion of bad debts.

Reporting at the regular Government meeting in January 2024, Minister of Planning and Investment Nguyen Chi Dung said that the macroeconomic situation in January was basically stable, the economy continued to recover, and the growth outlook for 2024 was forecast to be optimistic.

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