tion rate at 7% despite recently

Vietnam Limits Foreign Currency Loans to Curb Inflation

Bloomberg News 25 March 2011



Vietnam’s central bank instructed banks to limit foreign currency loans as of May 6 as part of government efforts to curb inflation, according to a statement on its website today. Credit institutions will be allowed to make short-, medium- and long-term foreign currency loans to businesses to settle import contracts, the State Bank of Vietnam said in the statement. In this case, companies will have to have foreign currency resources to repay banks, it said. Banks are also allowed to grant short-term foreign currency loans for exports, according to the statement. In order to get the loans, companies will have to ensure sufficient foreign currency holdings from exports to repay loans. Others loans demand will require documented approval from the central bank’s governor, according to the statement.



Prime Minister Nguyen Tan Dung’s government is struggling to contain inflation and narrow atrade gap that reached $12.4 billion last year, undermining the dong. Officials devalued the dong for the fourth time in 15 months on Feb. 11 to narrow the excess of imports over exports amid concern the nation may run short on capital needed to fund the deficit. Vietnam’s consumer prices rose 13.89 percent this month from a year earlier, compared with a 12.31 percent pace in February, according to figures released by the General Statistics Office in Hanoi today. That’s the highest figure since February 2009. The trade deficit widened to $1.15 billion from a revised $1.11 billion in February, according to preliminary figures released today.





Vietnam Economy Plagued by Imbalances

The Wall Street Journal 24 March 2011

Vietnam's inflation rate accelerated and its trade deficit widened in March, showing that imbalances continue to plague the economy and will keep up pressure on its ailing currency. Consumer prices surged 13.89% in March from a year earlier, the fastest on-year pace since February 2009, the General Statistics Office said Thursday, making it increasingly difficult for authorities to cap this year's inflation rate at 7% despite recently
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