Vietnam Central Bank Lifts Dollar Reserve Ratios 100bps

The State Bank of Vietnam raised the required reserve ratios on foreign currency for credit institutions by 100 basis points.  The ratio on non-term foreign currency deposits and deposits of less than 12 months will be 8% (7% previously) for most State-owned commercial banks, joint stock banks, 100 percent foreign owned banks, joint venture banks, and foreign bank branches.  The ratio will be 7% (6% previously) for the Bank for Agricultural and Rural Development, the Central People's Credit Fund, and cooperative banks.  The ratio on deposits longer than 12 months will be 6% (5%) and 5% (4%) respectively for those two groups.

The Vietnamese central bank last raised the required reserve ratios on foreign currency by 100 basis points in June this year.  The bank also increased its reverse repurchase interest rate by 100 basis points to 15.00% in May this year, and subsequently reduced the OMO rate by 100 basis points to 14.00%.  Vietnam reported annual inflation of 22.16% in July, up from 20.82% in June, 19.78% in May, and 17.51% in April this year, according to the General Statistics Office.  The Vietnamese Dong is currently trading around 20,840 against the US dollar.

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