Vietnam c.bank to manage exchange rate flexibly as oil prices raise inflation risks

Deputy Governor of the State Bank of Vietnam Pham Thanh Ha told a government press briefing the global economic environment had become more complex from late 2025 into early 2026, posing challenges for monetary policy management and banking operations.

Escalating military tensions between the United States, Israel, and Iran in the Middle East in recent days, along with geopolitical complexity in the region, have pushed oil prices higher, at times rising between eight percent and 13 percent, putting pressure on inflation globally.

On Wednesday morning, U.S. West Texas Intermediate crude rose 1.22 percent to US$75.47 per barrel, raising concerns about potential disruptions to energy supply and renewed global inflation pressures.

Ha said the State Bank of Vietnam had implemented policy measures in line with government guidance to help control inflation, stabilize the macroeconomy, and support economic growth.

The central bank has used monetary policy tools to ensure sufficient liquidity for the economy, particularly during peak payment demand at the end of last year.

Lending rates for new loans have shown a downward trend and the money market has remained stable, while credit growth has picked up from the start of the year.

By the end of February, the average interbank exchange rate had fallen 0.94 percentage points compared with the end of 2025, with foreign currency supply described as abundant.

However, exchange rates have edged higher in recent days amid tensions in the Middle East and are now above levels seen at the end of 2025.

Major central banks have become more cautious about cutting interest rates and some have signalled possible increases to curb inflation, which could put pressure on Vietnam’s exchange rate and money market.

The State Bank of Vietnam will continue to adjust interest rates in line with market conditions and macroeconomic developments while directing credit toward production, priority sectors, and economic growth drivers, Ha said.