Central bank says Vietnam prepared for all eventualities.
After the US Federal Reserve left interest rates unchanged on September 17 the State Bank of Vietnam (SBV) issued an official response via a press release on September 20.
The central bank cited the results of a CNBC survey, where prior to the September meeting 84 per cent of respondents predicted the Fed would increase interest rates but after the meeting only 64 per cent believe it will do so at the December meeting, which implies lower expectations that rates will rise this year. It also said there were opinions suggesting that the Fed would not increase rates until March next year given commodity and oil prices are low and the global economy still exhibits signs of instability, which presents a risk to the US economy in the mid-term.
The SBV said the possibility of the Fed increasing interest rates has been mooted since the end of 2014 and was taken into account when the central bank adjusted the exchange rate and the exchange rate band recently.
It said that the exchange rate will be flexible enough to ward off any negative movements in international and domestic markets from now to the end of the year and the early months of 2016. Any Fed decision to increase interest rates will not influence the SBV’s decision to keep exchange rates stable. Moreover, the central bank said it would adopt appropriate methods and continue selling foreign currency if needed to secure supply and demand and quell expectations over exchange rates to keep the market stable.