HANOI (Reuters) – Vietnam will maintain a flexible monetary policy aimed at controlling inflation, while authorities will monitor the policies of U.S. President-elect Donald Trump in order to adjust domestic policies accordingly, its central bank said on Tuesday.
Bad debt was on a rising trend and Vietnam’s bond and stock markets are facing difficulties, as is the property sector, despite signs of recovery, deputy central bank governor Dao Minh Tu told a regular press briefing.
Vietnam’s manufacturing-led economy expanded 7.09% last year to $476.3 billion, outpacing the 5.05% growth of 2023, official data showed on Monday. The growth was driven by strong exports and robust foreign investment inflows.
But despite the momentum, economists say weaknesses remain in the banking and real estate sectors, with credit growth below target.
Tu said non-performing loans were under control and commercial banks were operating stably. Bank lending had increased 15.08% as of Dec. 31 and the central bank was targeting credit growth of 16% this year, he added.
The central bank is dealing with troubled lender Saigon Joint Stock Commercial Bank (HM:) (SCB), he said, adding the takeover of two weak banks by private lenders would be completed before the Lunar New Year. In October, the central bank said another two were to be absorbed by bigger banks.
The State Bank of Vietnam last year mounted an unprecedented rescue of SCB after it became embroiled in the country’s biggest financial fraud. Reuters reported in April the SBV had pumped in $24 billion in “special loans” to prevent its collapse.
Pham Chi Quang, head of the central bank’s monetary policy department, said policies of the Trump administration would be monitored closely.
The United States is a top destination for Vietnam’s exports and Trump has pledged to impose new tariffs on imports.
Quang said foreign exchange policy “would remain flexible” in accordance with global factors.
“We will continue to stabilise interest rates and the forex rate amid difficulties in 2025. It’s a challenging task for the SBV in the coming time but we are confident to be able to control the market,” Quang said.
Vietnam’s dong is currently trading close to its lowest levels against the dollar.
