The government through its resolution No 11, has given priority to stabilizing the economy.

Inflation is caused by excess credit growth, usually fuelled with loose monetary policy by the Central Bank to support government deficit spending which will also hurt exchange rate pegs.

A State Bank of Vietnam action to ease policy rates earlier however was received with concern by the International Monetary Fund.

However dollar-pegged rate countries are now also hit by a weak US dollar and some of the inflation is coming from the US Federal Reserve, America's central bank.

Hong Kong which has a hard peg with the US dollars (unlike a soft-peg which Vietnam has) and cannot print money or depreciate its currency on its own reported inflation of 7.9 percent in July, the highest in 16-years.

Commodity prices including food, and precious metals like gold has been rising to new highs due to a weak dollar and money printing by the Federal Reserve.

In Vietnam food prices rose 34 percent in August from a year earlier. Telecoms were the only item to fall at a n absolute level, the General Statistics Office said.

A gold price index compiled by the GSO rose 47.6 percent in August.

Your Comment

Your Name/Handle

Your Email (Your email will not be dispalyed)

Location

Country