Vietnam's SBV sticks to 0% interest rate to tackle dollarisation

20 Aug '24

1 min read

Vietnam's SBV sticks to 0% interest rate to tackle dollarisation

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Measures taken by the State Bank of Vietnam to tackle the dollarisation of the economy have led to stabilisation of the exchange market and a rise in foreign reserves, remittance flows and foreign investments, economists and experts say.
SBV's zero-per cent interest rate policy has significantly contributed to halt the rate of dollarisation of the economy.

Measures taken by the State Bank of Vietnam (SBV) to tackle the dollarisation of the economy have led to stabilisation of the exchange market and a rise in foreign reserves, remittance flows and foreign investments, according to economists and experts.

SBV’s zero-per cent interest rate policy has significantly contributed to its effort to halt the rate of the dollarisation of the economy, effectively reducing half the country’s foreign currency deposit over the last decade.

Such efforts helped the country to successfully rein in inflation from double-digits to single digits and maintaining it at a low level, according to domestic media report.

The interest rate has been among the most effective policies implemented by the central bank to slow down the rate of dollarisation, SBV’s deputy governor Pham Thanh Ha said.

Experts have advised SBV to keep a watch on the exchange market to ensure the policy’s effectiveness and only intervene if there are issues with the market.

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