State Bank's operations under pressure of interest rates, exchange rates, and gold prices

(Chinhphu.vn) - Core inflation maintained above 3% for many months, high credit growth, fluctuating exchange rates and gold prices, posing great pressure, requiring flexible management and proactive response.

Government leaders chair the regular August Government meeting - Photo: VGP/Nhat Bac

Core inflation remains above 3%

At the regular August Government Meeting organized by the Government Office on September 6, Deputy Governor of the State Bank of Vietnam Doan Thai Son analyzed: Core inflation has remained above 3% in recent times. This is a worrying indicator, because normally, the 3% threshold has been considered a warning sign in policy management.

The causes come from both domestic and international sources. Externally, global inflationary pressure remains high, energy and raw material prices, along with unpredictable fluctuations in the world market, causing production and import costs to increase sharply. Domestically, house rents and dining out costs have increased rapidly, coupled with the adjustment of gold prices and a series of state-managed goods, creating an additional burden for inflation.

"With this trend, the State Bank agrees with the Ministry of Finance on the need to closely monitor and operate in a very flexible manner. When there are new developments, we need to be proactive and take the lead. If inflation continues to show signs of increasing, we need to immediately take pre-emptive measures to anticipate the trend, we cannot wait subjectively. Experience shows that if inflation has exceeded a certain threshold, subsequent control solutions will have to pay a very high price. The State Bank will continue to closely monitor to take timely measures within its authority and propose to the Government," said Deputy Governor Doan Thai Son.

Deputy Governor of the State Bank of Vietnam Doan Thai Son - Photo: VGP/Nhat Bac

Exchange rate pressure is forecast to remain high.

Deputy Governor Doan Thai Son informed: As of August 31, the average lending interest rate was 6.38%, down 0.56% compared to the end of 2024. However, the general trend is fraught with risks.

Outstanding credit balance at the end of August reached 17.14 quadrillion VND, up 11.08% compared to the end of last year. If calculated for the whole year, credit increased by about 20.19%, the highest level in many years, while normally it is only about 14.5%.

This leads to two consequences. First, banks are forced to increase capital mobilization, potentially pushing up deposit interest rates, and then lending interest rates. Second, strong credit growth means more money supply, causing inflationary pressure in the long term.

This year, especially in August, the exchange rate has been under a lot of pressure. The USD interest rate remains high while the VND interest rate is low, which also creates a trend of capital transfer. In addition, the disbursement of foreign loans has decreased, but the need to repay debts has increased.

To respond, the State Bank flexibly manages the exchange rate, coordinates with interest rate and liquidity tools, and is ready to sell foreign currency when necessary. As of September 4, 2025, the exchange rate was 26,380 VND/USD, down 0.09% compared to August 22 - the time the agency intervened, but still up 3.45% compared to the end of 2024.

In addition, due to objective reasons from the world situation, exchange rate pressure in the coming time is forecast to remain high.

Urgently complete the new operating mechanism with 'gold'

Reporting on the management of the gold market on behalf of the State Bank, Deputy Governor Doan Thai Son said: In the past week, the world gold price has skyrocketed, converted to Vietnamese currency, it has increased by more than 3 million VND/tael. At the same time, part of the communication activities about the increase in gold price, creating a widespread expectation that gold price will break the peak of 3,500 USD/ounce, causing the demand for gold to increase sharply.

The recent increase in gold prices was due to three main factors. First, the world gold price increased very high. Second, the market expectation and psychology that the gold price will continue to increase, leading to a very high demand for gold from the people. Meanwhile, another reason is our supply, because we are in the process of converting the gold management mechanism to the new mechanism, so the State Bank temporarily stopped selling SJC gold to the market. This led to the situation that the gold supply on the market became quite scarce. Those are the three main factors.

State Bank data shows that gold businesses' demand for gold reserves is not high, because gold, unlike other commodities, cannot be reserved due to very high capital costs.

Regarding the gold market situation, following the Government's direction, the State Bank has just completed its inspection of all large gold trading enterprises as well as commercial banks with large gold trading sectors and is in the process of implementing the inspection conclusions.

Implementing the Prime Minister's direction, the State Bank will strengthen inspection and examination to clarify this matter, together with relevant ministries and branches, to handle any violations, if any.

"The most important thing is to urgently implement solutions to manage the gold market according to the new mechanism approved by the Government," Deputy Governor Doan Thai Son emphasized.

Mr. Minh

Source: https://baochinhphu.vn/cong-tac-dieu-hanh-cua-ngan-hang-nha-nuoc-truoc-ap-luc-lai-suat-ty-gia-gia-vang-102250906161602219.htm