Liquidity withdrawal? take it easy
Posted by VBN on Oct 15th, 2010 and filed under Banking-Finance. You can follow any responses to this entry through the RSS 2.0. You can leave a response or trackback to this entry
Local investors should take it easy to the Prime Minister’s request that Vietnam commercial banks may quickly drain liquidity from circulation, the state-run online newspaper VnEconomy quoted the opinion of an un-named analyst.
Local investors should take it easy to the Prime Minister’s request that Vietnam commercial banks may quickly drain liquidity from circulation, the state-run online newspaper VnEconomy quoted the opinion of an un-named analyst.
Local investors have been concerned that the move will imply a tightening monetary policy in the coming time for curbing inflation and it seems to go against the goal of cutting interest rates.
However, the analyst said the country’s central bank may need to eye the specific macroeconomic indicators in October, especially the inflation, to take action, adding that if inflation quickens in the coming months, the Government and SBV will prefer the goal of curbing inflation instead of focusing on cutting interest rates.
He added that Prime Minister sent a message that policy makers should react flexibly to different scenarios.
Another analyst eased investors’ worries by saying that draining liquidity quickly from the economy is only a temporary solution if inflation is under pressures.
“Inflation is a long process which do not always stem from high money supply. As Vietnam have widely and deeply integrated to the global economy in recent years, external factors may have bigger impact on inflation”, he said, cited that the global economy recovery has made imported goods regain, boosting up input costs and in turn raise domestic prices. – Stoxplus.com