Chuck Kuhn's Asia in Photos: Central bank Vietnam cuts key rate to damp impact of global crisis

Tuesday, October 21, 2008

Central bank Vietnam cuts key rate to damp impact of global crisis

The State Bank of Vietnam Monday cut the benchmark interest rate to 13 percent to limit the “negative impact” of a possible global recession on the economy.
The central bank reduced the key rate from 14 percent, effective from today, according to a statement on the State Bank of Vietnam (SBV)’s website. Vietnam’s benchmark rates, which had been raised thrice since February, are still the highest in Asia, along with Pakistan’s, as the government tries to slow inflation from 27.9 percent.
Commercial banks use the base rate to calculate their own rates for lending and deposits. It had been at 14 percent since June.
“If they are doing this now, they must feel very comfortable that inflation is under control,” said Alain Cany, the Ho Chi Minh City-based chairman of the European Chamber of Commerce (EuroCham) in Vietnam. “With inflation looking to be more under control, and given the world situation, I don’t think this damages the central bank’s credibility.”
Lower interest rates will make it easier for companies to borrow money, bolstering company profits and helping the government to meet its growth target. India Monday cut its key rate for the first time since 2004 to protect Asia’s third-largest economy from the global financial crisis.
Nguyen Dai Lai, Deputy Director of the SBV’s Banking Development Strategy Department, told Thanh Nien Daily the central bank had cut the official interest rate in a bid to “increase the liquidity of commercial banks and help them reduce their lending interest rates in order to create more favorable conditions for firms to access capital.”
Vietnamese policy makers also lowered the refinancing rate to 14 percent from 15 percent, and the discount rate to 12 percent from 13 percent, according to the statement. The central bank doubled the interest rate it pays on compulsory reserves for banks to 10 percent.
Global crisis
“Although the Vietnamese economy isn’t yet showing signs of a recession, we have seen some impact of the deepening global financial crisis,” said Nguyen Thi Kim Thanh, a deputy director of the bank’s Monetary Policy Department in Hanoi. “It’s now time for the central bank to do something to prevent the economy from slowing further.”
more information-->>>Vietnam latest news - Thanh Nien Daily

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They say "

“I can’t say what made me fall in love with Vietnam - that a woman’s voice can drug you; that everything is so intense. The colors, the taste, even the rain. Nothing like the filthy rain in London. They say whatever you’re looking for, you will find here. They say you come to Vietnam and you understand a lot in a few minutes, but the rest has got to be lived. The smell: that’s the first thing that hits you, promising everything in exchange for your soul. And the heat. Your shirt is straightaway a rag. You can hardly remember your name, or what you came to escape from. But at night, there’s a breeze. The river is beautiful. You could be forgiven for thinking there was no war; that the gunshots were fireworks; that only pleasure matters. A pipe of opium, or the touch of a girl who might tell you she loves you. And then, something happens, as you knew it would. And nothing can ever be the same again.”
― Graham Greene, The Quiet American

Tips on Travel to Vietnam

It's always warm in Southeast Asia apart from high mountains, so leave the heavy clothing at home. Cotton and breathable fabrics are always better than synthetics -- although cotton does wrinkle a lot when traveling! December through April is roughly the dry season in that region, although it can still rain a little. December is a good time to go in terms of temperature -- cooler than in the humid summertime. Either way, wearing more clothing (shirt sleeves and long pants) is always more respectful towards the Asian culture, especially when visiting temples and rural areas.