Nguyen Le Nam, Deputy Director of the Monetary Policy Department at the State Bank of Vietnam, made the remarks at the conference "Mobilizing capital effectively to support double-digit growth targets", held on March 12 by Lao Dong newspaper in coordination with the Ministry of Finance and the State Bank of Vietnam.

Pressure on exchange rates and domestic monetary markets

According to Nam, the monetary and foreign exchange markets have recently been negatively affected by global political instability and increasingly unpredictable monetary policies from major central banks.

This environment creates significant challenges for monetary policy management, as regulators must carefully balance multiple overlapping objectives - controlling inflation, supporting economic growth and minimizing the impact of external shocks in order to maintain macroeconomic stability.

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Nguyen Le Nam - Deputy Director of the Monetary Policy Department at the State Bank of Vietnam. Photo: Hai Nguyen.
 
 
 

In the context of pressure on exchange rates, foreign currency supply and demand, and macroeconomic stability, the State Bank of Vietnam has operated the central exchange rate flexibly in line with market developments.

This approach has helped absorb external shocks while authorities coordinate monetary policy tools and remain ready to intervene in the foreign exchange market when necessary to ease pressure.

As a result, the foreign exchange market continues to function smoothly, and legitimate foreign currency needs of the economy have been met fully and promptly.

Nam also noted that the global economy has experienced several shocks in recent days as energy prices surged and financial and asset markets fluctuated strongly.

These developments have largely been driven by escalating tensions in the Middle East, which are adding further inflationary pressure in many countries.

Major central banks around the world, including the US Federal Reserve, have become much more cautious about cutting interest rates. The Reserve Bank of Australia is even considering raising rates as early as March 2026 to control inflation.

"This has created pressure on the exchange rate and the domestic monetary market," Nam said, adding that these factors are expected to continue increasing risks to global growth and inflation, thereby directly and negatively affecting Vietnam.

In particular, inflationary pressure is rising as global oil prices climb, pushing domestic fuel prices higher.

Maintaining macroeconomic stability and controlling inflation

In this context, maintaining a firm commitment to inflation control is essential to anchor inflation expectations and strengthen confidence among citizens, businesses and foreign investors in a stable macroeconomic environment.

Such stability provides the foundation for production and business activities that support economic growth.

Under these conditions, the State Bank of Vietnam will continue focusing on improving the effectiveness of monetary policy implementation to pursue its core objectives: controlling inflation and maintaining macroeconomic stability.

"Practical experience from both the world and Vietnam shows that high economic growth is meaningful and sustainable only when macroeconomic stability is maintained and inflation is effectively controlled," Nam said.

He added that the central bank will continue implementing policy solutions that have previously proven effective.

Tuan Nguyen