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Oil price reduction affects everyone in economy

The oil price reduction has had a big impact on everyone, from farmers, who are busy working on the rice fields and don’t care about what happens in the US or the Middle East, to stock investors who hold large amounts of oil & gas firms’ shares.
VietNamNet Bridge - The oil price reduction has had a big impact on everyone, from farmers, who are busy working on the rice fields and don’t care about what happens in the US or the Middle East, to stock investors who hold large amounts of oil & gas firms’ shares.

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The owner of a rubber plantation covering tens of hectares in Dong Nai province said he had never felt so pessimistic before as the rubber latex price has been decreasing.

“If I can sell rubber latex at VND19 million a ton, I would still hold out. If the price goes down to VND16 million, I will become moneyless,” he said.

Not only rubber, but minerals also have seen the prices plummeting in accordance with the crude oil price slide.

Just within the first three weeks of 2016, the crude oil price in the world market dropped by 23 percent. The price was reported at $28.13 per barrel on January 20. The information about the crude oil price floods daily newspapers and tops TV news. This is because the oil price has had impacts on everyone and on every aspect of the national economy and life.

Not only rubber, but minerals also have seen the prices plummeting in accordance with the crude oil price slide.

A motorbike driver might have sighed with relief when hearing that the RON 92 petrol price decreased further on January 19 to VND15,442 per liter, which means that he now can save VND20,000 a month from the lower payment for petrol.

Housewives now can feel a little bit at ease because the General Statistics Office (GSO) reported that the consumer price index (CPI) in 2015 was the lowest in the last 14 years which increased by 0.6 percent only if compared with 2014.

Thanks to the oil price fall, the prices of building materials and houses have decreased by 1.62 percent, while transport service fee has decreased by 11.92 percent and cooking gas price by 18.6 percent.

As the CPI stays low, curbing the inflation is no longer a difficult task for the State Bank. However, analysts have warned that the inflation may increase sharply again because the factors that make up the CPI may change at any time. The dong/dollar exchange rate won’t stay for a long time at the current rate once the US dollar has become stronger.

Therefore, if the crude oil price bounces back, the inflation rate in 2016 may soar to 3 percent or even 5 percent as analysts warned.

Meanwhile, financial investors have been described as ‘put on tenterhooks’ as the crude oil price keeps tumbling. The VN Index of the Vietnamese stock market once plunged by 24 points in January, or nearly 4 percent, because of which the capitalization value of the HCM City Stock Exchange decrease by $1.4 billion just within several hours.


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