Commenting on the State Bank 's latest move in widening the exchange rate band, and talking to press reporters, Dr. Nguyen Minh Phong - Economic expert, considers this policy necessary in the current period.

How do you rate the State Bank to increase the exchange rate band from +/- 3% to +/- 5% for import and export enterprises?

The adjustment of the VND to USD exchange rate band that the State Bank has just introduced is a new move, and can be said to be very new because for many years the State Bank has fixed it at +/- 3. %.

Loosening the exchange rate band: Meeting multiple objectives

With a level of +/- 5% and maybe even higher, it shows that the thinking in exchange rate management has adjusted in the direction of flexibility, tracking and responding to market price movements more, and especially the move towards strong foreign currencies like USD.

In the context that we are attached to strong currencies in the world, in which, strongly attached to the USD, the strengthening of the USD naturally requires the VND to adjust. With an extremely fast increase, a large margin of the USD, with an increase of +/- 5% has not really met the growth rate of the USD.

However, with this level of +/- 5%, it shows that we still have a certain independence in the operation of the State Bank. We have both met the needs and requirements of the market, competitive pressure and met the requirements of inflation control in the country.

Regarding the impact of the expansion of the exchange rate band, I think that this will help the economy become more competitive and reduce the pressure of the State Bank to sell foreign currencies to intervene in the exchange rate. . Minimize the difference between the USD price on the black market and the official price.

Imports tend to be cheaper. Because if we fix the band +/- 3%, surely the Vietnamese currency becomes too hot, too strong. At that time, imports become expensive and put pressure on the price of imported goods.

On the other hand, the adjustment of +/- 5% makes export activities more competitive when we have made a soft adjustment so that Vietnamese goods become cheaper than the old margin +/ - 3%.

In summary, with this adjustment, we hope there will be an improvement in the operating pressure of the State Bank. With a flexible and coordinated financial and monetary policy to meet the objectives of controlling inflation, supporting import-export businesses , and recovering economic growth.

One month ago, the State Bank decided to raise interest rates and affirmed to keep the exchange rate stable.

In the context of fighting inflation and increasing the value of money, raising interest rates is one of the main tools that banks in many countries are currently using, especially the United States.

Vietnam also has a very good lesson in this regard. Such an increase in interest rates helps to reduce unnecessary consumption needs, increase savings, including attracting capital flows to banks, creating conditions for banks to have more lending liquidity as well as increase the room according to the permission of the State Bank.

Economist Nguyen Minh Phong

At the same time, it helps to ensure the interests of depositors and avoids withdrawals running around between banks to chase interest rates.

The adjustment of the exchange rate and the widening of the exchange rate band have its reasons and these two adjustments have a certain relationship with each other, accordingly, creating the common goal of helping to control inflation, especially currency inflation.

The exchange rate adjustment does not change, or invalidate, the State Bank's position in keeping the exchange rate stable. The State Bank did not adjust the central exchange rate, but only raised the band. That margin is for commercial banks to decide for themselves. This creates more room for commercial banks to adjust foreign currency trading within the allowable margin, thereby reducing their foreign currency pressure on the market.

At the same time, the State Bank also minimizes the need to sell foreign exchange to intervene in the market

Therefore, it is normal for the exchange rate band to widen +/- 5%, moreover, we have had periods of +/- 5% in the past.

It is forecasted that from now until the end of the year, the interest rate increase trend may continue in the context that inflation is still under great pressure, banks all have the need to increase capital mobilization, minimize cash withdrawal. loops between banks in the deposit system.

Therefore, it is difficult to sharply increase or decrease interest rates, but keeping and slightly increasing deposit rates at deposit terms may be adjusted. As for the general basic interest rate, there will not be too big fluctuations in the short term here.

What about the loan interest rate?

The current lending interest rate is not controlled by the State Bank and depends on banks, businesses as well as contractual agreements. In general, banks that do not have an improvement in service work are forced to raise lending rates to compensate for the costs they have spent in mobilizing capital through increasing deposit rates.

As for banks that diversify services, have good income and thereby maintain cash outflows with stable interest rates, keep market share, and retain customers that they have, are and will have. .