Protecting the exchange rate “wall”, ready to respond to “headwinds”

National Assembly deputies and experts warn that “headwinds” may blow to Vietnam, especially tariff barriers and unpredictable movements of the USD. In this context, maintaining exchange rate stability will be a prerequisite to protect macroeconomic stability.

A characteristic of Vietnam is that investment capital for production and business depends heavily on credit. Photo: D.T.

The challenge remains enormous.

Earlier this week, the National Assembly questioned State Bank of Vietnam (SBV) Governor Nguyen Thi Hong. One of the questions was the management of monetary policy to control inflation in the context of the volatile world economic situation.

Speaking to reporters after the question-and-answer session, delegate Hoang Van Cuong (Hanoi) said that monetary policy has been managed quite well in the past, but the challenges in the coming time are still very large. The world economic situation is fraught with many challenges. Although the US Federal Reserve (Fed) has just further reduced interest rates, many new challenges have emerged, such as the risk of the US changing its tax policy, erecting tariff barriers on imported goods, affecting Vietnam's exports, not to mention the strong increase in the USD.

Many opinions say that it is necessary to further reduce lending interest rates to stimulate credit growth and support growth. However, delegate Hoang Van Cuong said that in the current period, priority should be given to exchange rates. If interest rates are deeply reduced, the exchange rate will skyrocket, causing macroeconomic instability.

Previously, answering questions from delegate Tran Anh Tuan (HCMC) about solutions to stabilize exchange rates and further reduce interest rates, Governor Nguyen Thi Hong said that the State Bank will closely monitor market developments and, in case the exchange rate fluctuates too much, will promptly intervene to sell foreign currency. Regarding interest rates, the State Bank will consider because if interest rates are reduced too much, it will increase exchange rates and affect foreign investment flows.

According to Ms. Hong, the Fed's interest rate cut at first glance seems to reduce pressure on the exchange rate. However, the exchange rate and the domestic foreign exchange market are affected by many factors, not only the Fed's interest rate, but also the real supply and demand of foreign currency in the economy. If exports improve and FDI attraction increases, then supply will improve and exchange rate management will be favorable. However, if exports are difficult, there is no output, or when import demand increases, the exchange rate will be under pressure. That is not to mention the psychological factors of expectation, speculation, and hoarding.

The State Bank of Vietnam remains steadfast in its management goal of stabilizing the value of VND. Accordingly, it combines interest rate and exchange rate policies to make VND more attractive, encouraging people to convert foreign currencies into VND. Therefore, although the State Bank of Vietnam strives to reduce interest rates, it also determines that it must harmonize the goals, because if interest rates are reduced too much, it will affect the exchange rate and the foreign exchange market.

Vietnam is one of the most open economies in the world. Large openness means that trade and investment flows will circulate very quickly and strongly, short-term capital can easily reverse, making it difficult to operate monetary policy. This requires the State Bank to be ready to respond flexibly to developments to firmly adhere to the set goals and implement synchronous, flexible, properly dosed and timely solutions, contributing to controlling inflation, stabilizing the macro economy and stabilizing the monetary and foreign exchange markets.

“In order to grasp the situation firmly and early, from a distance, the State Bank as well as the ministries and branches of the Government have strengthened analysis and forecasting work to be proactive. However, with the unpredictable and complicated developments of the world economy, even forecasting is difficult. The International Monetary Fund (IMF), the World Bank (WB) and the world's major international financial institutions also regularly adjust their forecasts,” said Governor Nguyen Thi Hong.

Boost credit, but always be wary of inflation

At the question-and-answer session, many National Assembly deputies asked the Governor of the State Bank of Vietnam about the issue of promoting credit in the context of inflation being lower than the target inflation (average inflation for 10 months was 3.78% and core inflation was 2.76%, while the target inflation was 4-4.5%).

The number one priority now is to stabilize the exchange rate. If the exchange rate fluctuates strongly, it will directly affect businesses, thereby affecting GDP growth rate.

– Delegate Hoang Van Cuong (Hanoi)

According to Governor Nguyen Thi Hong, pushing credit into the economy depends not only on the will of the operator, but also on the accessibility of businesses and people. As of the end of October 2025, credit in the entire economy increased by 10.08%, and is likely to increase by 15% by the end of the year as targeted.

In fact, from the second half of 2023, in the Government's general macroeconomic management, the goal of prioritizing economic growth has also been set. Monetary policy is prioritizing this orientation. However, the SBV leader affirmed that he was never subjective about inflation. "We regularly monitor. In case there are existing inflationary pressures, we will adjust monetary policy," Governor Nguyen Thi Hong affirmed.

In response to the question from delegate Nguyen Thi Viet Nga (Hai Duong) about how people and businesses can access capital, the head of the State Bank of Vietnam said that Vietnam's special feature is that investment capital for production and business depends heavily on credit. Currently, the credit debt ratio to GDP is over 120%, among the highest in the world, and is often warned by international organizations such as the World Bank and the Asian Development Bank (ADB).

According to the State Bank, currently, there are many channels for businesses to access capital, not just banks. Particularly for banks, if they want to borrow, organizations and individuals must meet enough conditions and standards, most importantly, demonstrate the ability to repay the debt.

“Recently, the Government has given strong direction on how to promote other segments of the financial market such as the stock market, bank bonds, etc., to solve the problem of medium and long-term capital for businesses. The nature of the banking system is to provide short-term capital. If we can solve the long-term capital needs of businesses through the stock and bond markets, the risks to the credit institution system will be reduced,” said Governor Nguyen Thi Hong.

Source: https://baodautu.vn/bao-ve-tuong-thanh-ty-gia-san-sang-ung-pho-voi-con-gio-nguoc-d229829.html