The State Bank of Vietnam (SBV) is intended to reduce excess liquidity in the financial market by issuing bonds so as to ease inflation pressure, newspaper Vietnam News reported Wednesday.
The central bank also plans to continue keeping liquidity in check to control inflation, which accelerated to 8.39 percent year- on-year in July. It is now considering issuing short term bonds through open market operations to absorb some of the excess cash floating in the market.
A main cause of rising prices was foreign capital inflows, which have driven the central bank to eat up in order to control the VND exchange rate and increase capital reserves, SBV deputy governor Nguyen Dong Tien was quoted as saying.
As the foreign capital inflows are too much, the SBV purchased up to 500-600 million U.S. dollars daily on several days, while the total amount of foreign capital purchased for the whole last year was only 4 billion dollars, said the deputy governor.
The result is foreign currency reserves have doubled since the beginning of this year and enough to cover 20 weeks of imports, said Tien, noting that it also led to excess VND in the market which helped drive the domestic prices rising.
The central bank has already taken steps to cut the amount of capital in the market this year. In June, it doubled reserves requirements for commercial banks to 10 percent, which took out about 30 trillion VND (some 1.8 billion dollars) from the market, said the paper.
Source: Xinhua
|
Comment
Tell A Friend
Print Format
Save Article