VietNamNet Bridge – In order to keep the interest rate gap between the USD and the VND attractive, the interest rates for the VND have not been reduced. Surprisingly, while the Consumer Price Index (CPI) has increased very slowly or has decreased, the deposit interest rates have remained unchanged. The General Statistics Office (GSO) announced that the CPI in September decreased by 0.21 percent compared with the month before. The figure did not surprise analysts, who had heard that both Hanoi and HCM City had reported minus inflation rates in their localities. However, the deposit interest rates remained high. As a result, the real positive interest rate has increased to 5-6 percent. This means the real profit that depositors can pocket after deducting the CPI increase is 5-6 percent per annum. In previous years, the figure was just 2-4 percent. Analysts believe that the interest rates won’t be decreasing towards the end of the year. They think that it would be … [Read more...] about Should the interest rate be cut or the exchange rate stabilized?
Treasury exchange rates
US Treasury Secretary Timothy Geithner has kicked off the G20 meeting in Nanjing with a call for more consistency in international currency exchange rates. Mr Geithner said tight control of currency pricing by some countries was hurting global economy. The United States and other developed nations have been critical of China's exchange rate policy. The meeting is being attended by some of the financial world's biggest names. Mr Geithner said that the Group of 20 nations was working closely to put in place a system that would streamline the exchange rates globally. "We have been engaged in a multilateral effort in the G20 to establish stronger norms for exchange rate policy," he said. China has been pushing for the yuan to become a global reserve currency. That push got a big boost as the French President, Nicolas Sarkozy, suggested that given the importance of emerging economies such as China to global growth, their currencies should be added to the … [Read more...] about Timothy Geithner seeks uniform exchange rate policy
Group of 20 finance leaders will pledge on October 23 to commit themselves to pursue market-determined exchange rates and refrain from "competitive devaluation" of their currencies. A communique to be issued at the conclusion of G20 finance ministers' and central bank governors' meeting will state: "We're all committed to moving toward market determined exchange rates that reflect underlying fundamentals and refrain from competitive devaluation," said an official. A US official separately said the United States had no expectation its proposal of setting numerical targets on external balances would be mentioned in the G20 statement. The US proposal, aimed at pressing countries with surpluses such as China to let their exchange rates rise, met with a cool reception on the first day of a two-day meeting meant to smooth the path for a G20 summit in Seoul on November 11-12. China was against any limits on imbalances, another G20 source said on October 22. He also said there … [Read more...] about G20 statement to pledge commitment to exchange rates
NANJING, China, March 31, 2011 (AFP) - French President Nicolas Sarkozy and US Treasury Secretary Timothy Geithner on Thursday called for more flexible exchange rate regimes as G20 nations met on global monetary reform in China. The pair, speaking at the start of the talks in the eastern city of Nanjing, also urged a widening of the basket of currencies underlying the IMF's international reserve asset, while keeping the dollar and euro stable. The West wants to see the yuan become part of the International Monetary Fund's Special Drawing Rights (SDR) basket as part of its efforts to prod Beijing into opening up its tightly managed and controversial currency regime. "It's clear we must move towards a more flexible exchange rate system that would allow the world to absorb shocks. But this system cannot evolve without rules, coordination and oversight, or instability will prevail," Sarkozy said. Geithner echoed his comments, saying the gap between flexible and managed exchange rate … [Read more...] about France, US call for flexible exchange rates at G20
US President Barack Obama has kept up the pressure on China to revalue its yuan, telling President Hu Jintao to adopt a more "market-oriented" exchange rate for the Chinese currency. Obama stated his view that it was "important for... a sustained and balanced global economic recovery that China move toward a more market-oriented exchange rate," said senior National Security Council official Jeff Bader after a face-to-face meeting of the two leaders. US lawmakers have threatened sanctions against Beijing, saying that China's action to keep the yuan artificially low against the dollar had resulted in a ballooning US trade deficit and a loss of American jobs. But Hu delinked the yuan's value from the US trade deficit or the nearly 10 percent unemployment grappling the United States. "RMB (renminbi or yuan) appreciation would neither balance Sino-US trade nor solve the unemployment problem in the United States," Hu told Obama, according to China's official Xinhua news agency. The … [Read more...] about Obama presses Hu on yuan exchange rate