HANOI: Vietnam’s central bank is ready to provide liquidity to the local banking system, Governor Nguyen Thi Hong said on Sunday, as lenders come under pressure from rising interest rates and tighter credit conditions.
Hong confirmed that the central bank held emergency meetings over the week with commercial banks to discuss system liquidity, Reuters reported on Friday. “The State Bank of Vietnam is ready to provide liquidity to help credit institutions maintain their ability to pay,” Hong told national broadcaster VTV, while adding that the situation is now developing in a “ positive direction”.
The central bank raised policy rates this year by a total of 200 basis points and allowed the dong to weaken, as the currency lost 6% against the US dollar in the past three months. The stock market has fallen more than 20% in the past three months.
A widening anti-corruption drive has meanwhile hit the real estate sector, ensnaring prominent businessmen, brokers and developers and freezing the debt market that has fueled the expansion of the sector. Hong said things had improved and urged local banks to assess the situation cautiously.
“The market is now moving positively and the market sentiment is now calm,” she said. “Vietnam’s economic fundamentals remain positive.” The government has taken steps to boost public investment, exports and foreign investment inflows, which Hong said helps ease the pressure on the foreign exchange market and the liquidity of the banking system.