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Vietnam keeps rate steady at 8 pct in Feb, stocks jump   2010-01-26 - Reuters

 
 
   
Vietnam’s central bank said on Tuesday it would keep interest rates unchanged in February, quelling speculation that a hike was imminent in the face of accelerating inflation and boosting share prices.

 

The benchmark base rate and the refinancing rate will stand at 8 percent while the discount rate will remain at 6 percent next month, the State Bank of Vietnam said in a statement on its website, www.sbv.gov.vn.

The bank decided against moving rates because “the macro-economy is very stable and inflation is not worth worrying about”, the newspaper Tuoi Tre quoted central bank Governor Nguyen Van Giau on Tuesday as saying.

January inflation came in at 7.62 percent compared with the same month last year, the government’s General Statistics Office reported later on Tuesday, accelerating from 6.52 percent in December.

Inflation has been single digits since last April, cooling after soaring to nearly 30 percent in August 2008.

Tuesday’s rate announcement helped boost the country’s two stock exchanges, with the Ho Chi Minh Index ending the day up 3.53 percent and the Hanoi index jumping 5.17 percent.

“Information on the unchanged base rate for February lifted market sentiment and raised expectations of a stable rate until the end of the first quarter,” said Trinh Vinh Quyen, an investment analyst at Vietnam International Securities.

The central bank raised the base rate to 8 percent from 7 percent at the start of December in a surprise move announced in late November along with a devaluation of the dong. It had stood at 7 percent since February 2009.

Commercial banks use the base rate to calculate dong lending rates, which are capped by the central bank at 1.5 times the base rate.

The seasonal effect of Vietnam’s biggest holiday, the Lunar New Year, or Tet, is expected to push up inflation as families stock up on food and festive goodies. The holiday falls in mid-February this year.

Last Thursday Giau denied rumors affecting the country’s jittery stock markets that the central bank was planning to raise rates again.



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