Vietnam will hike reserve requirement if needed: governor
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Vietnam's central bank will consider raising reserve requirements if truly necessary, a state-run news website quoted governor Nguyen Van Giau as saying on Friday as authorities grapple with one of Asia's highest inflation rates.
The State Bank of Vietnam has hiked interest rates three times since mid-February and cut its credit growth target as part of government efforts, including plans for fiscal tightening, to curb inflationary pressures.
Raising reserve requirements "would have an immediate effect, quickly and strongly affecting the liquidity of banks, and because banks need time to prepare to adapt the State Bank has not used this (tool) at this time", Giau told VnEconomy.vn, the online version of the Vietnam Economic Times.
Giau said a 1 percentage point increase in reserve requirements, which now range from 0-4 percent, would pull "tens of trillions of dong" out of the system.
Annual inflation in Vietnam reached 12.31 percent in February, a two year high, and some economists say that despite the tightening measures it could be higher this month after the government implemented double-digit price increases for electricity and fuel.
Giau has declined to touch reserve ratios despite pressure from government advisors.
There was no clear indication from Giau in the VnEconomy report of the conditions under which he would raise the ratios.
On March 1 the SBV said it would double reserve requirements for banks that failed to bring down their credit growth to specific targets by the end of June and the end of the year.
The government is expected to release its estimates for March inflation next week.
