Vietnamese dong faces strong global headwinds

Good fit: A man trying on sandals at a shop in Hanoi. Vietnam’s economy recovered outstandingly in the second quarter with a growth rate of 7.7%, the fastest expansion in 11 years, but there still appears testing times ahead. — AFP

HANOI: Global central banks are in a rush to raise interest rates to cool rampant inflation and their moves are challenging the State Bank of Vietnam’s (SBV) policy making in a way to support the economic recovery while sustaining macroeconomic sustainability.

Last week, the US Federal Reserve (Fed) raised interest rates by another 75 basis points (bps) – the second straight month and its third this year – in an effort to fight inflation which hit a 40-year high of 9.1% in June. That takes the cumulative June-July increase to 150 bps – the steepest since the early 1980s.