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Commentary

Vietnam Hikes Rates From 7% to 12%

WSJ reports that Vie

HANOI—Vietnam’s central bank Tuesday raised two of its key policy rates on dong-denominated loans in another bid to tame inflation.

The rediscount rate—the rate the central bank pays commercial banks on their surplus funds—has been raised to 12% from 7%, the State Bank of Vietnam said in a statement posted on its website. It last raised the rate in November, to 7% from 6%.

This is equivalent to our reverse repo rate. The repo rate seems to be at 12% also. Can you imagine what kind of inflation they must be experiencing?

Bloomberg says their 5 year note has gone to 11.63%, which is incredible. Recently the government hiked fuel prices by 24% and electricity rates went up 15%. They have a kinda sorta fixed exchange rate mechanism – the Dong is allowed to trade 1% on either side of a central bank determined rate and the black market rate has the dong pegged even weaker.

The BBC says their Feb Inflation was at 12.31%