Vinacapital has released an ‘Economist’s Note’ detailing challenges facing Vietnam’s gold market and exchange rate. It identifies the two key issues facing the dong as the stronger US dollar and the high local gold price. On the latter, it says this is increasing gold smuggling which is increasing demand for US dollars to buy gold from outside of Vietnam.
The local securities firm predicts a rise in deposit interest rates of 50 to 100 basis points on the back of higher inflation it says should reach 4 to 5 percent. It also suggests it’s unlikely the State Bank will increase interest rates instead choosing to focus on interbank interest rates instead.
Of note: Fitch Solutions yesterday said it believed interest rates would actually go down later this year.