Vietnam central bank raises interest rates by 100 basis points

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Vietnam central bank raises interest rates by 100 basis points

The central bank of HANOI Vietnam announced on Thursday it would raise its policy rates by 100 basis points as the country struggles to keep inflation under 4 per cent this year.

The refinancing rate will be raised to 5.0 per cent and the discount rate will be raised to 3.5 per cent on Friday, according to the State Bank of Vietnam SBV, in rare monetary policy tightening by the central bank.

The rate hike by the U.S. Federal Reserve and the country's prime minister this week prompted the central bank to reconsider policy rates.

The dong currency fell for nine consecutive sessions to 23,700 per dollar, the lowest since 1993, according to Refinitiv Eikon data.

The daily reference rate set by SBV was at 23,316 dong per dollar, the lowest level since 2005, according to the data show.

The SBV governor Nguyen Thi Hong said earlier in the day that Vietnam's biggest economic challenge was to keep inflation under control.

The bank said on Thursday it would raise the caps on the interest rates of dong-denominated deposits from Friday by 0.3 -- 1.0 per centage points, depending on the maturities.