HANOI (Reuters): Vietnam's central bank Governor Nguyen Thi Hong will step down at the end of her term, forgoing another term to focus on a new role in parliament, two people with direct knowledge of the matter told Reuters on Friday.
Hong is allowed to serve as governor and lawmaker simultaneously but is expected to take a senior position in the parliament as part of a regular reshuffle, expected in April after this month's national elections.
Her departure is not expected to have a significant impact on monetary policy, but it comes at a delicate moment when central banks around the world grapple with an energy crisis caused by the Iran war.
The SBV did not immediately respond to a request for comment. Reuters could not reach Hong.
ASIA CENTRAL BANKS SEEK TO BOOST CONFIDENCE
The sources declined to be named as the information is not public and has not previously been reported.
Hong has headed the Southeast Asian nation's central bank since 2020. Her term is linked to the formation of a new government, expected in April. The SBV is part of the government, which is ultimately controlled by the Communist Party. The party, which has ruled Vietnam unopposed for decades, won nearly 97% of the seats in the March 15 elections.
The central bank's major policy decisions are often based on government instructions, with the executive sometimes announcing key decisions before the bank itself.
Asian central banks on Thursday sought to shore up market confidence, with South Korea announcing a $3.3 billion emergency bond buyback and the Philippines holding a surprise policy meeting, signalling its readiness to act if inflation pressures worsen.
The SBV has so far focused on contingency planning, said a person familiar with the matter.
The party decided key state positions in a meeting this week but has not announced its nominees for top jobs, including president and prime minister. Those nominations are expected to be announced by the time parliament opens on April 6. During the weeks-long session, lawmakers will ratify the party's choices of state leaders.
The SBV has an inflation mandate, with only a secondary goal to support growth. But in recent years, the bank has significantly increased credit-growth targets, fuelling economic expansion.
The unconventional tool, which involves setting caps that effectively work as targets, is a key instrument the bank uses to conduct monetary policy. Last year the credit-growth target for the banking system was raised to 20% from 16%, with specific goals for each bank. After concerns over asset-bubble risks, this year's target in January was lowered to 15%, although it is usually tweaked during the year.
The SBV has at times tried to soften political decisions that might have had negative financial implications. Last year it warned about risks from a bid by leading conglomerate Vingroup for a major railway project that would have transferred most financial risks onto the state budget. Vingroup later withdrew its bid.
(Reporting by Francesco Guarascio and Phuong Nguyen; Additional reporting by Khanh Vu; Editing by William Mallard) -- Reuters
