VietNamNet Bridge - The Governor of the State Bank of Vietnam (SBV), Le Minh Hung, has been in office for only three months, but he has been active in regulating monetary policy.

Governor of the State Bank Le Minh Hung

Hung received 464 votes from 488 National Assembly’s Deputies on July 28 to continue holding the post of SBV’s Governor. On April 9, only 403 out of 486 National Assembly’s Deputies voted for him. Hung’s prestige has improved in deputies’ eyes after three months.

An analyst commented that Hung did not take any move within one month after he assumed office in April. ‘Where has the Governor gone’ was the question raised at that time.

Meanwhile, the public was dying to know what the newly appointed Governor would do to regulate the monetary policy. They were awaiting his answers to the questions if they could continue lending in foreign currencies, how the bank restructuring process would go and how the interest rate would perform.

The Governor of the State Bank of Vietnam (SBV), Le Minh Hung, has been in office for only three months, but he has been active in regulating monetary policy.

Hung only began taking action after one month. On May 27 alone, he released three important documents which cover all the aspects of the monetary market.

Circular 06 has been issued to replace Circular 36, putting an end to the prolonged arguments among experts. The risk factor for real estate loans was lowered from 250 percent to 200 percent, while the maximum ratio of short-term capital used for long-term loans was raised from 40 percent to 50 percent.

Commenting about the decision, experts said it showed a flexible policy the governor is following in the current context of the economy, when businesses need capital to recover production activities.

Circular 07 replacing Circular 24 on lending in foreign currencies issued on the same day has also been highly appreciated. Under the new legal document, some subjects now can once again borrow in foreign currencies until December 31, 2016.

The decision once raised the worry that it would affect the dong/dollar exchange rate. However, that has not come true: the exchange rate has been stable since then.

After the first moves, Hung has also sent a message about the interest rate policy. Affirming that the interest rates won’t decrease sharply, Hung promised that the interest rate will be stable to help businesses better draw up production plans.

On the interbank market, the overnight interest rate now hovers around 0.7-0.9 percent per annum, the lowest level since the beginning of the year.

Hung’s moves have also been praised in the forex market. No shocks have occurred in the market after Brexit, though the other currencies in the world have been fluctuating so heavily. This is because SBV has bought $7 billion this year to increase the forex reserve.

Dan Viet