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11 MARCH 2011 CONTRIBUTORS Hai Pham Analyst, Mekong Economics +65 6216 1968 [email protected] Paul Gruenwald Chief Economist, Asia +65 6216 1814 [email protected] VIETNAM MONTHLY CHARTBOOK EMERGING ASIA ECONOMICS KEY INTEREST RATES WERE RAISED AGAIN AND AGAIN WHILE INFLATION SURGED FURTHER • The State Bank of Vietnam (SBV) substantially raised its key interest rates in the last three weeks: The refinancing rate was raised twice in Feb to 11% and again in Mar to 12%, from 9% previously. The rediscounting rate was raised to 12% from 7% previously. The 7-day reverse repo rate was raised by 100bps to 12% in Feb. • CPI inflation climbed to 12.3% (y/y) in Feb and is likely to rise further on higher domestic electricity and fuel prices and mounting pressures from global oil prices. However, inflation momentum appears to have peaked in Jan. • Feb export and import growth fell, and the trade deficit widened slightly to $950mn. • Going forward, inflation pressures still persist and we expect further tightening measures will be implemented this year. CHARTS OF THE MONTH Vietnam - Interest Rates (%pa) 4 6 8 10 12 14 16 18 20 Mar 08 Jun 08 Sep 08 Dec 08 Mar 09 Jun 09 Sep 09 Dec 09 Mar 10 Jun 10 Sep 10 Dec 10 Mar 11 SBV Refi nancing Rat e SBV Di scount ing Rate VNIBOR Vietnam - Interest Rates (% pa) 6 7 8 9 10 11 12 13 Jan 10 Feb 10 Mar 10 May 10 Jun 10 Jul 10 Aug 10 Sep 10 Oct 10 Nov 10 Dec 10 Jan 11 Mar 11 O/N Int erbank deposit rate SBV 7-day reverse repo rat e Vietnamese dong - Implied NDF Discount (%) 0 4 8 12 16 20 24 Jan 10 Feb 10 Mar 10 Apr 10 May 10 Jul 10 Aug 10 Sep 10 Oct 10 Nov 10 Dec 10 Feb 11 Mar 11 18.0 18.5 19.0 19.5 20.0 20.5 21.0 21.5 12m-NDF Discount 1m-NDF Discount USD-VNDths (RHS) Vietnam - Inflation -10 0 10 20 30 40 Feb 08 May 08 Aug 08 Nov 08 Feb 09 May 09 Aug 09 Nov 09 Feb 10 May 10 Aug 10 Nov 10 Feb 11 -1 0 1 2 3 4 C PI y/y CPI 3m/3m, saar CPI m/m (RHS)
