Business
Vietnam raises refinance rate 200 bps to 11 pct
  • | Reuters | February 18, 2011 10:55 AM

Vietnam\'s central bank raised its refinance rate by 200 basis points to 11 percent on Thursday, a move than comes amid calls for more decisive steps to curb double-digit inflation and nearly a week after the bank devalued the currency.

The base rate, which has served as the benchmark, was kept unchanged at 9 percent and the discount rate was also held at 7 percent.

The State Bank of Vietnam also increased the overnight rate for electronic interbank transfers and another rate for specific types of loans from the central bank to commercial banks, it said on its website, www.sbv.gov.vn.

It offered no explanation.

"This move could be aimed at two targets: helping curb inflationary pressures and pushing banks to sell dollars instead of holding onto them," said a currency trader at a bank in Vietnam who declined to be identified.

Last Friday, the bank devalued the beleaguered dong by 8.5 percent and narrowed the band in which the currency is allowed to trade against the dollar to 1 percent from 3 percent on either side of the mid-point.

Economists applauded the step after a four-month mismatch between official and unofficial exchange rates, but many had said further measures were needed to curb inflation.

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